Buy AU Small Finance Bank; target of Rs 725: ICICI Securities

Buy

ICICI Securities research report on AU Small Finance Bank

AU SFB’s Q4FY25 performance was mixed with sustained growth momentum and benefits from operational efficiency, but elevated credit cost in unsecured portfolios (MFI + credit card + PL). While management highlighted that NIM is likely to remain under pressure (5.8% during Q4FY25), a 25bps savings deposit rate cut in Apr’25, lower interest reversals (improved outlook on asset quality for FY26) and ~70% fixed rate asset book remain key upside risks to NIM guidance.

Outlook

Further, management expects credit cost to moderate to 75–85bps in FY26 vs. 1.3% in FY25, implying better asset quality performance in coming quarters. Maintain BUY with an unchanged TP of INR 725, valuing the stock at 2.5x Sep’26E BVPS.

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

AU Small Finance Bank - 23042025 - icici