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Systematix Report
Despite the strong operating performance, Systematix has retained a 'Hold' rating on AU Small Finance Bank Ltd. with a target price of Rs 1,020, citing limited upside due to valuations. The stock is valued at 3.3x FY27E and 2.7x FY28E price-adjusted book, which could cap near-term gains.
The brokerage also highlights that if AU SFB sustains its growth and asset quality trajectory, it expects valuation multiples to follow the typical cycle-near-term derating post capital raise, followed by re-rating as leverage builds-broadly oscillating in the 2.5x-3.5x P/ABV range.
AU Small Finance Bank Q4 Results
AU SFB's Q4 FY26 reported PAT of ~Rs 830 crore (+65% YoY/ 25% QoQ) was 9%/2% ahead of consensus / brokerage's estimates primarily on account of lower credit cost and higher margins. AUM growth accelerated to 21% YoY / 8% QoQ on the back of strong growth across segments, led by retail secured assets (+21% YoY / 5.7% QoQ) commercial banking business (+29.3% YoY /11.6% QoQ) and pick up in unsecured book (+8.2% QoQ vs +1% in Q3 FY26).
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