AUBANK - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment Rating: 3.4
| Stock Code | AUBANK | Market Cap | 73,267 Cr. | Current Price | 980 ₹ | High / Low | 1,030 ₹ |
| Stock P/E | 31.7 | Book Value | 243 ₹ | Dividend Yield | 0.10 % | ROCE | 8.40 % |
| ROE | 14.2 % | Face Value | 10.0 ₹ | DMA 50 | 965 ₹ | DMA 200 | 837 ₹ |
| Chg in FII Hold | 1.95 % | Chg in DII Hold | -0.64 % | PAT Qtr | 668 Cr. | PAT Prev Qtr | 561 Cr. |
| RSI | 49.6 | MACD | -0.95 | Volume | 11,75,937 | Avg Vol 1Wk | 22,85,406 |
| Low price | 478 ₹ | High price | 1,030 ₹ | PEG Ratio | 1.37 | Debt to equity | 7.87 |
| 52w Index | 91.0 % | Qtr Profit Var | 26.3 % | EPS | 31.0 ₹ | Industry PE | 23.2 |
📊 AUBANK trades at a premium valuation (P/E 31.7 vs industry 23.2), supported by decent profitability metrics (ROE 14.2%, ROCE 8.4%). The PEG ratio of 1.37 suggests valuations are moderately aligned with growth. Quarterly PAT growth (+26.3%) indicates earnings momentum, though dividend yield is very low at 0.10%. Debt-to-equity ratio is high (7.87), reflecting the leveraged nature of banking operations. Technicals show neutral momentum (RSI 49.6, MACD slightly negative), with the stock trading above its 200 DMA (837 ₹), suggesting medium-term strength.
💡 Ideal Entry Price Zone: 880 ₹ – 940 ₹, closer to valuation comfort and DMA support. Current price (980 ₹) is slightly above fair entry levels.
📌 Exit Strategy / Holding Period: If already holding, maintain a medium to long-term horizon (3–5 years) given steady earnings growth and sectoral demand. Partial profit booking can be considered near 1,020–1,030 ₹ resistance. Long-term investors should hold as the company’s fundamentals support compounding, though high leverage and low ROCE warrant cautious monitoring.
Positive
- Strong quarterly PAT growth (668 Cr. vs 561 Cr.).
- ROE of 14.2% indicates decent profitability.
- Stock trading above 200 DMA shows medium-term strength.
- FII holdings increased (+1.95%), reflecting foreign investor confidence.
Limitation
- High debt-to-equity ratio (7.87) typical of banking but adds risk.
- Low dividend yield (0.10%) offers minimal income return.
- ROCE at 8.4% is modest compared to peers.
- P/E ratio (31.7) is above industry average (23.2).
Company Negative News
- DII holdings decreased (-0.64%), showing reduced domestic institutional support.
- MACD slightly negative (-0.95), indicating weak short-term momentum.
Company Positive News
- Quarterly PAT growth of 26.3% shows earnings momentum.
- FII holdings increased (+1.95%), reflecting foreign confidence.
- EPS of 31 ₹ supports valuation strength.
Industry
- Industry P/E is 23.2, highlighting AUBANK’s premium valuation.
- Banking sector in India has strong long-term growth potential driven by credit expansion and financial inclusion.
Conclusion
✅ AUBANK is a fundamentally stable bank with decent ROE and earnings growth, but valuations are slightly stretched and ROCE is modest. Ideal entry is around 880–940 ₹. Existing holders should maintain positions for 3–5 years, with partial profit booking near 1,020–1,030 ₹ resistance, while monitoring leverage and profitability trends.