AU Small Finance shares gains 6% as Q4 profit jumps 18% to ₹504 cr, brokerages divided

In FY24-25, the bank’s net profit soared 32 per cent to ₹2,106 crore.

AU Small Finance Bank shares surged 6 per cent on posting 18 per cent rise in profit at ₹504 crore for March quarter FY25 on account of increase in core income.

The bank’s total income increased to ₹5,031 crore, from ₹3,385 crore in Q4FY24, net interest income (NII) soared 57 per cent to ₹2,094 crore and net interest margin (NIM) for Q4FY25 stood at 5.8 per cent compared to 5.1 per cent in Q4FY24. The board has also recommended final dividend of ₹1 per share.

For FY27, the bank has guided higher return on assets (RoA) to contribute 72-75 per cent of its loan portfolio.

In FY24-25, net profit soared 32 per cent to ₹2,106 crore. Following the Q4 performance, the bank has gained mixed reaction from brokerages.

Morgan Stanley has assigned an overweight call at a target price of ₹750. It said the bank delivered 1.5 per cent RoA, much higher than its peers, despite high interest rates, tight liquidity and elevated asset quality stress.

Over the next two years, the bank’s RoAs can expand as the rate cycle has turned and MFI asset quality improves, Morgan Stanley added.

Citi has assigned neutral rating at ₹625.

Meanwhile, Nuvama Institutional Equities said that the credit cost missed consensus estimates by 15 per cent in the fourth quarter. The brokerage reiterated reduce rating at ₹530 target price.

Credit cost shall settle at a lower 85bp in FY26 against 1.3 per cent year-on-year (y-o-y) with first half being elevated due to MFI write-offs. Credit cost shall fall to 6–7 per cent from 16 per cent in Q4FY25 on the cards and to 3.5 per cent in MFI. “NIM shall be under pressure in FY26 due to repricing of 70 per cent loans and lower than system CASA. Loan growth shall be 21–25 per cent y-o-y,” Nuvama added.

The stock traded at ₹651.50 on the NSE, up 6.14 per cent as at 9.56 am.

Published on April 23, 2025