AU Small Finance Bank Falls On Poor Asset Quality: SEBI RAs See Short-term Pressure But Long-term Growth
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Diverging Reports Breakdown
AU Small Finance Bank Falls On Poor Asset Quality: SEBI RAs See Short-term Pressure But Long-term Growth
AU Small Finance Bank shares recovered marginally to trade 5% lower at ₹750. The bank’s gross non-performing assets (NPAs) rose to 2.47% of gross advances, compared to 1.78% last year. The outcome dented retail sentiment on Stocktwits, shifting it to ‘bearish’ It was ‘neutral’ a week ago. SEBI-registered analyst Saurabh Sahu to remain bullish on its long-term prospects. The stock is trading below its 20- and 50-day moving averages following its Q1 results, indicating short-term weakness.
At the time of writing, the AU Small Finance Bank shares recovered marginally to trade 5% lower at ₹750.
In its June quarter earnings (Q1FY26), the bank’s gross non-performing assets (NPAs) rose to 2.47% of gross advances, compared to 1.78% last year. Net NPAs grew to 0.88% from 0.63%. As a result, provisions and contingencies nearly doubled to ₹533 crore from ₹283 crore.
The outcome dented retail sentiment on Stocktwits, shifting it to ‘bearish’ amid high message volumes. It was ‘neutral’ a week ago.
AU Small Finance Bank’s Sentiment Meter and Message Volumes at 12:50 p.m. IST on July 21 | Source: Stocktwits
However, the bank posted a healthy growth in net profit and total income during the quarter, leading SEBI-registered analyst Saurabh Sahu to remain bullish on its long-term prospects.
Q1 Earnings Highlights
AU Small Finance Bank kicked off FY26 on a strong note, posting a 16% rise in net profit to ₹581 crore and an 18% jump in total income to ₹2,855 crore, a sign of the bank’s ability to maintain momentum in a highly competitive sector.
Sahu said that the real highlight was its deposit growth, which rose 31% to ₹1.28 lakh crore. The CASA ratio held steady at 29.2%, reinforcing the bank’s strategy of building a stable, retail-focused liability base. On the lending side, advances grew 18%, with the total loan book reaching ₹1.17 lakh crore.
While margins softened slightly to 5.4%, AU Small Finance Bank offset the impact with disciplined cost management, pre-provision operating profit (PPoP) surged 38%. While its asset quality declined, a strong provision coverage ratio (PCR) of 83% signals cautious and proactive risk management, the analyst said.
CEO Sanjay Agarwal emphasized the bank’s long-term focus, noting that the strategy remains centered on sustainable growth and consistent execution rather than chasing short-term gains.
Technical Outlook
AU Small Finance Bank is trading below its 20- and 50-day moving averages following its Q1 results, indicating short-term weakness, according to SEBI-registered analyst Prabhat Mittal.
He recommended avoiding fresh long positions for now, with major resistance seen near ₹770. If selling pressure persists, the stock could test the ₹680-₹670 support zone in the coming days.
Year-to-date, the stock has gained more than a third of its total value.
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