Morgan Stanley has reiterated an ‘Overweight’ rating on AU Small Finance Bank, with a target price of ₹750, citing resilient profitability and strong asset quality control in Q4FY25.
The bank reported a net profit of ₹503.7 crore (down 4.7% QoQ), with NII growth of 3.5%, and gross NPA ratio improving slightly to 2.28% from 2.31%. Net NPA declined sharply to 0.74% from 0.91%, reflecting improved recoveries and better collection efficiency, especially in the MFI and secured loan segments.
Despite operating in an environment of tight liquidity and high interest rates, the bank posted a 1.5% RoA, which Morgan Stanley noted was significantly higher than peer private banks.
Looking ahead, Morgan Stanley sees RoA expansion continuing, driven by the turn in the rate cycle and improving MFI asset quality, making AU SFB the preferred pick in the mid-sized private bank universe.
Disclaimer: The above views are of the broker’s and not the author or the publication’s. Please make any and every investment decision after consulting your financial advisor.
