Goldman Sachs has initiated a “Buy” rating on AU Small Finance Bank (AUSFB) with a price target of ₹831, representing a 20% upside from its September 4 closing price of ₹687.75. The brokerage firm believes that AUSFB is well-positioned for its next phase of growth, with sector-leading EPS growth on the horizon.
Goldman forecasts a 27% CAGR in EPS for AUSFB over FY24-FY27, driven by improving Return on Assets (ROA) and robust loan growth in the bank’s commercial retail portfolios, which accounted for approximately 70% of its loans in Q1FY25. This loan growth is expected despite the ongoing normalization in the credit cycle.
The bank is better positioned than many of its peers due to several factors, including its improved deposit market share, stronger asset quality controls, and operational efficiencies, including synergies from mergers. These factors should contribute to AUSFB’s sustained growth in the coming years.
TOPICS:
AU Small finance bank