Shares of AU Small Finance Bank Ltd. slipped nearly 2% to ₹805.75 on Monday, July 14, after brokerage firm Kotak Institutional Equities downgraded its rating on the stock to “sell” from “add” even as it raised the target price by about 8% to ₹700 per share.
The new target implies a downside of around 15% from the stock’s closing price of ₹821 on Friday. The brokerage cited the stock’s sharp rally as making the risk-reward proposition less attractive, even though it acknowledged that challenges in the unsecured business that hurt FY25 profitability are expected to ease in FY26.
Kotak said AU Small Finance Bank could deliver healthy business growth ahead of peers if the macro environment improves. However, it prefers to play the cyclical recovery through other, more attractively valued stocks.
Earlier last week, AU Small Finance Bank announced a partnership with LIC to distribute life insurance products across its network, aimed at increasing insurance penetration among underserved segments.
In Q4 FY25, the lender reported total deposits of ₹1.24 lakh crore, up 10.7% sequentially and 27.2% year-on-year. CASA deposits rose 5.4% quarter-on-quarter to ₹36,250 crore, while the CASA ratio stood at 29.2% versus 30.6% in Q3 and 32.2% a year earlier.
Of the 34 analysts covering the stock, 23 have a “buy” rating, six “hold” and five “sell,” indicating mixed sentiment.
As of Monday morning, the stock was trading in the range of ₹801.20–₹813.50 with a market cap of ₹599.45 billion.
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