1. At a Glance
AU SFB served up a 16% YoY PAT growth in Q1 FY26, clocking ₹581 Cr in profit with 31% jump in deposits and 18% growth in loans. But rising GNPA and negative financing margins are raising a few eyebrows.
2. Introduction with Hook
Picture AU Small Finance Bank as the Maruti of banking—ubiquitous in small towns, reliable, and increasingly expensive for what it offers.
- Q1FY26 PAT: ₹581 Cr (+16%)
- Loan Growth: +18%
- ROE: 13.3%
But behind the slick numbers is a story of margin compression, promoter dilution, and rising NPAs. Let’s unpack.
3. Business Model (WTF Do They Even Do?)
AU SFB operates with a retail-first, Bharat-next strategy:
- Retail Banking (76%) – Wheels, homes, MSMEs
- Treasury (13%) – Booked gains, managed risks
- Wholesale Banking (9%) – Mid-sized business loans
- Other (2%) – Insurance, FX, fee-based products
They’re small-town royalty—serving the unbanked with loans that make PSU bankers blush.
4. Financials Overview
Quarterly Snapshot (Q1 FY26):
| Metric | Value (₹ Cr) | YoY Growth |
|---|---|---|
| Revenue | 4,378 | +16.7% |
| Net Profit | 581 | +16.0% |
| NIM | ~5.1% est | Flat |
| ROE | 13.3% | ↓ YoY |
| EPS | ₹7.79 | Solid |
TTM Performance:
- Revenue: ₹16,673 Cr
- PAT: ₹2,184 Cr
- EPS (TTM): ₹29.34
- ROA: ~1.58%
5. Valuation
- Current Price: ₹795
- Book Value: ₹231
- P/B Ratio: 3.45x
- P/E Ratio: 27.1x
EduInvesting Fair Value Range (FY26E):
₹740 – ₹850
The market is paying HDFC Bank prices for a small-cap lender with rising NPAs. Confidence or FOMO? You decide.
6. What’s Cooking – News, Triggers, Drama
- Q1 PAT up 16% – Good, but not spectacular
- GNPA @ 2.47% – Slowly inching up
- Retail Mix Declining – 76% vs 79% in FY22
- Promoter Stake Falling – Dropped to 22.87%
- RoE, NIM under pressure – Growing topline, sagging bottom?
AU is growing—but it’s also evolving. And evolution is messy.
7. Balance Sheet
| Item | FY24 (₹ Cr) | FY25 (₹ Cr) |
|---|---|---|
| Equity Capital | 669 | 745 |
| Reserves | 11,890 | 16,422 |
| Deposits | 87,182 | 1,24,269 |
| Borrowings | 5,479 | 11,660 |
| Total Assets | 1,09,426 | 1,57,846 |
Key Points:
- Strong deposit growth
- Reserves jumped 38%
- Leverage increasing: More debt, less equity strength
8. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | CFI (₹ Cr) | CFF (₹ Cr) | Net Cash (₹ Cr) |
|---|---|---|---|---|
| FY24 | 2,608 | -4,855 | -802 | -3,049 |
| FY25 | 5,462 | -4,780 | 2,407 | 3,090 |
Key Insights:
- Operating cash healthy
- Investing cash mostly sunk into loan book
- Financing cash flipped positive (likely debt)
9. Ratios – Sexy or Stressy?
| Ratio | FY24 | FY25 |
|---|---|---|
| ROE | 13% | 14% |
| NIM | ~5.3% | ~5.1% |
| GNPA | 2.28% | 2.47% |
| Net NPA | 0.74% | 0.88% |
| CASA Ratio | ~30% | ~31% |
Verdict:
Margins falling. NPAs rising. ROE just holding. It’s not a panic yet—but it’s definitely blinking yellow.
10. P&L Breakdown – Show Me the Money
| Year | Revenue (₹ Cr) | PAT (₹ Cr) | EPS (₹) | ROE (%) |
|---|---|---|---|---|
| FY23 | 8,205 | 1,428 | 21.42 | 15% |
| FY24 | 10,555 | 1,535 | 22.93 | 13% |
| FY25 | 16,064 | 2,106 | 28.29 | 14% |
Topline rising fast. Bottomline slower. Margins compressing.
11. Peer Comparison
| Bank | P/E | ROE | GNPA | Net Profit (TTM) |
|---|---|---|---|---|
| AU SFB | 27.1 | 14.2% | 2.47% | ₹2,184 Cr |
| Ujjivan SFB | 13.0 | 12.4% | 4.1% | ₹726 Cr |
| Equitas SFB | 49.1 | 2.4% | 3.2% | ₹147 Cr |
| Jana SFB | 10.3 | 13.1% | 3.1% | ₹501 Cr |
Punchline: AU SFB is the most expensive by P/E—and the cleanest on asset quality. For now.
12. Miscellaneous – Shareholding, Promoters
- Promoter Holding: 22.87% (down from 28.2%)
- FII Holding: 35.58%
- DII Holding: 27.16%
- Public: 14.39%
- No. of Shareholders: 1.93 lakh
Flag: Promoter stake declining = concern for skin-in-the-game diehards.
13. EduInvesting Verdict™
AU Small Finance Bank isn’t your PSU grandma’s bank—it’s young, digital, and aggressive. But it’s also pricey, margin-squeezed, and increasingly levered. The next few quarters will determine if it’s the next HDFC or just another shiny NBFC-in-a-bank-suit.
For now, it walks the tightrope between scale and sustainability.
Metadata
– Written by EduInvesting Research | July 20, 2025
– Tags: AU Small Finance Bank, Q1FY26, Small Finance Bank, Retail Lending, Valuation, GNPA, ROE, Promoter Holding
