Why AU Small Finance Bank is a Strong Bet Despite Stock Correction in 2025
Business and Industry Overview:
AU Small Finance Bank is India’s largest small finance bank. It is based in Jaipur. It started in 1996 as a company that gave loans for buying vehicles. In 2017, it became a full bank. The bank helps people with low and middle incomes. It also helps small businesses. It gives loans, savings accounts, and other banking services. People can use UPI, mobile banking, and other digital services. The bank is listed on the stock market. Big investors like Warburg Pincus and International Finance Corporation have invested in it. In 2024, AU Bank merged with Fincare Small Finance Bank. This was the first merger between small banks. The bank has 2,383 branches in 25 states. It has 46,000 employees and 1.1 crore customers. It also has 505 ATMs across India. Its total deposits are ₹80,120 crore, and its total loans are ₹67,624 crore. The bank is growing fast. It is using technology to make banking easy. In 2023, it started a campaign with Bollywood actress Kiara Advani. The bank is strong and trusted.
Small Finance Banks (SFBs) are special banks in India that help small businesses, low-income people, and rural areas get banking services. They provide loans, savings accounts, deposits, and online banking. The industry is growing fast, with banks like AU Small Finance Bank and Ujjivan Small Finance Bank leading the way. SFBs are expanding quickly in rural and small-town areas, where many people do not have access to banks. In 2024, these banks are expected to grow their loans by 25–27%. mainly give loans for small businesses, homes, vehicles, and personal use. However, they face challenges in getting deposits because they offer higher interest rates to attract customers. To solve this, they are using other ways to get money, like selling loan portfolios to investors. Many SFBs have strong financial backing and are raising funds from investors and stock markets. They have also increased their capital reserves to remain stable. In the future, these banks will continue growing, especially in small towns and villages, helping more people and businesses get access to banking.
AU Small Finance Bank is the biggest small finance bank in India. It started as a finance company in 1996. In 2017, it became a small finance bank. It helps people and small businesses who cannot use big banks. The bank has grown very fast. It is now listed on the stock market. AU Bank has 2,383 branches across 25 states. It serves over 1.1 crore customers. Many of them live in villages and small towns. These places need better banking services. AU Bank gives loans, savings accounts, and other banking services. The bank uses technology to help customers. People can use online banking, video banking, and mobile banking. This makes banking easy and fast. The bank is strong financially. It has total assets of ₹1,01,176 crore. It has a good reputation and high credit ratings. AU Bank became more popular after a marketing campaign with Bollywood actress Kiara Advani. In 2024, it merged with Fincare Small Finance Bank. This made it even bigger.
The bank faces competition. Other small finance banks and big banks like HDFC and ICICI are its rivals. AU Bank offers higher interest rates to attract customers. It also reaches more villages and small towns. Its focus on technology and customer service makes it one of the best small finance banks in India.
Latest Stock News:
AU Small Finance Bank’s stock was moving between ₹540 and ₹730 for two years. Now, it has fallen below ₹540. If it stays below this level, the price may drop by 25-30%. The RSI, which shows stock strength, is moving toward the oversold zone. This means selling pressure is high, and the stock may fall more.
On March 17, the stock fell 2.7% and hit ₹478.35, its lowest price in a year. Since the start of 2025, it has dropped by 13%. This happened even when the overall stock market was doing well. NIFTY 50 rose by 0.50%, and SENSEX went up by 0.46%. The bank plans to raise ₹1,500 crore by selling special bonds. This will help strengthen its financial position. The bank’s total fundraising limit is ₹6,000 crore, approved in July 2024. Many other stocks also fell. A total of 199 stocks, including RR Kabel, Rolex Rings, and Muthoot Microfin, hit their lowest prices in a year. Despite this, the overall market remained strong. NIFTY 50 was up by 1.2%, and SENSEX increased by 1.31%. The bank is working to improve its finances, but investors are still unsure. The next few weeks will decide if the stock will recover or fall further.
Segmental information:
- Retail Banking: This includes savings accounts, current accounts, fixed and recurring deposits, debit and credit cards, and personal loans like home, car, and two-wheeler loans.
- Business Banking: This helps small and medium businesses. The bank offers loans for working capital, MSME financing, and current accounts for businesses.
- Loan Products: The bank gives loans like personal loans, home loans, car loans, commercial vehicle loans, and gold loans.
- Digital Banking: The AU 0101 app and NetBanking let customers use banking services online. This includes managing FASTag, making deposits, and other services.
- Insurance and Investments: The bank offers insurance for life, health, motor, and general needs. It also provides investment products like mutual funds, NPS (National Pension System), and Atal Pension Yojana.
- Asset Management: The bank helps customers manage and grow their investments in different financial assets.
Subsidiary information:
- AU Housing Finance Limited (AuHFL): This subsidiary gives home loans to customers. It helps people buy homes and offers other housing finance products.
- AU Insurance Broking Services Private Limited: This subsidiary helps customers find and manage different types of insurance.
- Fincare Small Finance Bank: In April 2024, AU Small Finance Bank merged with Fincare Small Finance Bank. This merger helped AU expand, especially in South India. Fincare’s shareholders got AU Small Finance Bank shares in exchange.
Q4 Highlights:
- Net Profit: The bank made ₹2,106 crore in profit for FY25, which is 37% more than last year (₹1,534.72 crore). For Q4, the profit was ₹503.7 crore, up 36% from ₹370.74 crore in the same quarter last year.
- Total Income: In Q4, the bank earned ₹5,031.27 crore, which is more than last year’s ₹3,370.51 crore.
- Interest Income: The bank earned ₹4,270.60 crore from interest, a 51% increase compared to last year.
- Dividend: The bank’s board has recommended a dividend of ₹1 per share (10% of face value). This will be approved at the next Annual General Meeting.
Financial Summary:
Amount in ₹ Crore | Q4 FY24 | Q4 FY25 | FY23 | FY24 |
Revenue | 2,830 | 4,271 | 10,555 | 16,064 |
Expenses | 1,346 | 2,197 | 4,678 | 7,750 |
EBITDA | -9 | -104 | 479 | 262 |
OPM | 0% | -2% | 5% | 2% |
Other Income | 464 | 761 | 1,746 | 2,526 |
Net Profit | 371.00 | 504 | 1,535 | 2,106 |
NPM | 13.11 | 11.80 | 14.54 | 13.11 |
EPS | 5.54 | 6.77 | 22.93 | 28.29 |