At a Glance
AU Small Finance Bank scaled from a Jaipur-based NBFC to a ₹58,000 Cr market cap digital-savvy bank serving over 1 crore Indians. With a focus on wheels, microfinance, and mortgages, it’s delivering 25% CAGR profit growth — but now faces rising NPAs, slowing margins, and a dramatic drop in promoter holding. Can the AU0101 app keep compounding?
1️⃣ Origin Story: From Wheels to Wallets
Founded in 1996 as a vehicle financier, AU got its Small Finance Bank license in 2015 and listed in 2017. Since then, it’s been on a mission to:
- Serve unbanked Bharat
- Build a mobile-first digital bank
- Collect deposits like a grown-up
- Still lend to truckers (but now with an app)
2️⃣ Financial Recap: The Small Bank With Big Numbers
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 4,950 | 5,922 | 8,205 | 10,555 | 16,064 |
| Net Profit (₹ Cr) | 1,171 | 1,130 | 1,428 | 1,535 | 2,106 |
| EPS (₹) | 18.75 | 17.94 | 21.42 | 22.93 | 28.29 |
| Deposits (₹ Cr) | 35,979 | 52,585 | 69,365 | 87,182 | 1,24,269 |
| Gross Loan Book (₹ Cr) | ~39,000 | ~52,000 | ~71,000 | ~89,000 | 1,08,921 |
| Gross NPA (%) | 1.8% | 1.7% | 1.6% | 1.9% | 2.3% |
| ROE (%) | 22% | 16% | 15% | 13% | 14% |
📉 Takeaway: Revenue tripled. Net profit nearly doubled. But NPA and ROE are… getting moody.
3️⃣ What They Actually Do 🧾
📦 Product Mix (Q3 FY25 Loan Book)
- Mortgage-Backed Loans: 33%
- Wheels (Vehicle Finance): 32%
- Commercial Banking: 21%
- Microfinance: 7%
- Others: 7%
💰 Deposit Mix
- Term Deposits: 65%
- CASA: 31%
- Certificates of Deposit: 4%
AU is basically lending to aspirational India — and funding it with urban India’s deposits. Nice arbitrage model, until the NPAs start rising.
4️⃣ Growth Hits, Glitches & Gimmicks 📈
✅ What’s Working
- 💸 Deposit Growth: From ₹36K Cr (FY21) → ₹1.24L Cr (FY25)
- 📱 App Game: AU0101 has 33L users, 15.8L active monthly
- 🧾 Loan Book: ₹1.08L Cr across vehicles, homes, MSME
- 🤝 Partnerships: Tied with Bharti AXA, Mastercard, launched AU Eternity for rich bros
❌ What’s Worrying
- 🚨 GNPA is rising: From 1.6% → 2.3% in 2 years
- 📉 NIM is slipping: 6.1% → 6.0%, despite higher yields
- 📉 ROE stuck at 14%: For a “growth bank,” that’s lukewarm
- 🧨 Promoter holding: From 28.2% (FY22) → 22.87% now
5️⃣ Digital Kool-Aid or Real Transformation? 🤔
AU wants to be seen as:
“India’s first truly digital small bank that understands the ground and the cloud.”
But let’s decode the truth:
| Initiative | Reality Check |
|---|---|
| AU0101 App | Great interface, but traction modest |
| 24/7 Video Banking | Cool, but niche audience |
| WhatsApp Banking | Common now; HDFC & ICICI do better |
| AU RuPay Credit Cards | Not game-changing yet |
| Micro-Merchant QR Loans | Good idea, tough to scale safely |
Verdict: It’s doing the right things. But is it winning? Jury’s out.
6️⃣ Valuation & Peer Roast Table 🔍
| Bank | P/E | GNPA | ROE | CASA Ratio | Price (₹) |
|---|---|---|---|---|---|
| AU Small Finance | 27.6 | 2.3% | 14.2% | 31% | 782 |
| Ujjivan SFB | 12.9 | 3.0% | 19.8% | 28% | 48 |
| Equitas SFB | 52.3 | 2.5% | 12.5% | 22% | 67 |
| Jana SFB | 10.3 | 4.2% | 11.5% | 21% | 495 |
😬 Verdict: AU is priced like a private bank, but its peers are dirt cheap. Either AU deserves a premium… or it’s about to get Ujjivan-ed.
7️⃣ EduInvesting Verdict: “Aspirational, but Not Immune”
AU is not the flashiest, nor the cheapest — but it’s been consistent.
👍 Why you might love it:
- 30%+ loan book CAGR
- 1.1 Cr customers and growing
- Good mobile app + tech focus
- Building a stable deposit franchise
👎 Why you might pause:
- NPA creep = early warning
- Promoter stake slide = hmm?
- ROE + NIM stagnating
- P/E too spicy for a sub-15% ROE bank
🏁 TL;DR
- 🚀 Tripled revenue in 5 years
- 💰 Deposit book at ₹1.24L Cr
- 🚩 NPAs rising quietly
- 💻 AU0101 app has potential, but not yet a moat
- 🧐 Valuation = private bank; operations = still evolving
AU may no longer be a “small” finance bank, but it’s also not yet a big-bank beast.
The bet? Whether it becomes the next IndusInd, or gets lost in the fintech fog.
✍️ Written by Prashant | 📅 16 June 2025
Tags: AU Small Finance Bank, SFB Stocks, FY25 Results, Fintech, AU0101, NPA, Digital Lending, EduInvesting 5-Year Recap, Ujjivan, Equitas, AU Eternity, CASA Growth
