AUBANK - Fundamental Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Fundamental Rating: 3.1

Let’s break down AU Small Finance Bank’s financial landscape and long-term investment proposition

🏦 Core Financials Review

Profitability & Returns

ROE: 22.3% — quite strong, indicating effective capital deployment.

ROCE: 12.4% — moderate; reflects efficiency in overall operations.

EPS ₹13.4 is respectable for a mid-cap bank, but less so when weighed against its valuation.

PAT data is missing — which affects precision in growth analysis.

Leverage & Liquidity

Debt-to-equity ratio: 3.56 — elevated, expected in banking, but implies heightened sensitivity to asset quality and cost of capital.

Dividend Yield: 0.14% — very low; not suited for income-focused investors.

💸 Valuation Benchmarks

Metric Value Insight

P/E Ratio 162 Extremely overvalued vs. Industry PE: 20.3

P/B Ratio ⚠️ Not provided Limits deeper valuation mapping

PEG Ratio 3.31 Indicates excessive pricing relative to growth

Intrinsic Value ❌ Likely below CMP Current valuation suggests stretched optimism

🧠 Business Model & Strategic Advantage

AU Bank focuses on small finance and retail lending — benefiting from inclusive banking trends in India.

Strong FII (+2.10%) and DII (+1.70%) inflow hint at rising institutional confidence.

Positioned well for financial inclusion, fintech collaborations, and tier-2/3 city penetration.

However, valuation leaves little margin for error — any earnings miss can trigger re-rating.

📉 Technical Overview

RSI: 39.2 — nearing oversold zone; potential short-term support.

MACD: -13.0 — bearish momentum evident.

Price: ₹740, below DMA 50 ₹756 but above DMA 200 ₹675 — a mixed technical signal.

52W Range: ₹478–₹841 — trading near upper band; downside risk from profit-booking.

📍 Suggested Entry Zone & Holding Plan

Entry Zone: ₹690–₹720 — near DMA 200, offering a margin of safety.

Long-term investors should track

Net Interest Margin expansion

Asset quality (NPAs)

Growth in deposits and CASA ratio

At current valuation, accumulate cautiously and incrementally, preferably on dips.

Want me to scout other small finance peers like Ujjivan or Equitas for comparative metrics? I can help build a diversified financial watchlist or identify thematic tailwinds. 🧾💹

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