AUBANK - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.0

Here’s a detailed breakdown of AU Small Finance Bank Ltd (AUBANK)

🧾 Core Financials

Profit Growth

Quarterly PAT rose from ₹504 Cr to ₹581 Cr — a 15.6% increase, showing solid earnings momentum.

EPS: ₹29.3 — healthy earnings per share for a mid-sized bank.

Profitability Ratios

ROE: 14.2% — decent shareholder return.

ROCE: 8.4% — modest, typical for banking due to asset-heavy structure.

Debt & Liquidity

Debt-to-equity: 7.92 — high, but expected in banking; reflects deposit leverage.

Dividend Yield: 0.14% — minimal, as profits are reinvested for growth.

📊 Valuation Indicators

Metric Value Industry Avg Remarks

P/E Ratio 24.6 17.2 Slight premium

P/B Ratio ~3.12 ~2.5 Fairly valued

PEG Ratio 1.06 ~1 Reasonably priced for growth

Intrinsic Value ~₹650–₹700 — Slightly overvalued

Valuation is moderately stretched, but justified by growth and improving fundamentals.

🏢 Business Model & Competitive Edge

Core Operations: Retail-focused small finance bank with strong presence in semi-urban and rural India.

Strengths

High CASA ratio and strong loan book growth.

Rising FII (+2.10%) and DII (+1.70%) holdings signal institutional confidence.

Risks

High leverage and exposure to unsecured lending.

Low dividend and moderate ROCE may deter conservative investors.

📉 Technical & Entry Zone

Current Price: ₹720

DMA 50/200: ₹731 / ₹690 — trading near support.

RSI: 48.3 — neutral zone.

MACD: -9.22 — bearish crossover.

Suggested Entry Zone: ₹680–₹700 range, ideally near DMA 200 or ₹650 support.

🕰️ Long-Term Holding Guidance

Hold if already invested, especially for exposure to financial inclusion and retail credit growth.

Good for fresh entry if price dips below ₹700.

Ideal for long-term only if

Loan book continues to grow >20% CAGR.

Asset quality remains stable and NPA levels are controlled.

Would you like a peer comparison with Equitas SFB or Ujjivan SFB, or a sector outlook for small finance banks?

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