AU Small Finance Bank’s stock fell sharply by 8.14% to ₹546.25 on the NSE as of 9:32 AM, following the bank’s announcement to reduce its FY25 loan growth guidance to 20% from the earlier projection of 25%. Additionally, the bank withheld its FY26 growth guidance, citing uncertainties in the macroeconomic environment.
Key updates from the revised guidance by AU Small Finance Bank :
- Secured loan book expected to grow by 23%-25%, while the unsecured loan book is projected to decline by 10%.
- FY25 credit cost guidance raised to 1.5%-1.6%, up from the earlier 1.3%-1.4%.
- ROA is now expected to be closer to 1.6%, consistent with the earlier forecast.
- Higher credit costs are anticipated for the next few quarters, particularly in the microfinance segment.
Brokerages react to guidance cut by AU Small Finance Bank:
- UBS: Maintains a neutral rating and cuts the target price to ₹640.
- JP Morgan: Maintains a neutral rating with a revised target price of ₹625.
- Nomura: Downgrades the stock to reduce, slashing the target price to ₹500.
- Citi: Maintains a sell rating, lowering the target price to ₹625.
The stock’s decline aligns with the cautious tone from analysts and rising concerns over credit costs and loan growth slowdown. The announcement comes amid a broader market downturn, with key indices such as Nifty trading below 23,000, further pressuring the stock.
Disclaimer:
The above article is for informational purposes only. Please consult your financial advisor before making any investment decisions. Business Upturn does not recommend buying or selling any stock.
