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Here's why brokerages are unhappy with AU Small Finance Bank?

3 brokerages have reduce/sell calls on AU Small Finance Bank (SFB) even after it reported highest-ever quarterly profit.

This is because most experts believe the stock valuations are too high and that the risk-reward is better in other stocks.

HDFC Sec has a 'reduce' reco on the stock with a target price of rupees 580, indicating a downside of 12%.

It has also tweaked its FY24E/FY25E estimates by -6% each, factoring in moderation in margins and higher opex.

Similarly, Nuvama also has a ‘reduce’ call on AUSFB with a target of rupees 560, indicating a downside of 15%.

"We find valuations expensive for the bank’s medium-term RoA profile. In all, we find better value in other banks," it said.

Dalal & Broacha, meanwhile, has a ‘sell’ call with a target of rupees 569, indicating a downside of 14%.

It recommends switching from AU Small Finance Bank to HDFC Bank.

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AU Small Finance Bank Q4.

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Here's why brokerages are unhappy with AU Small Finance Bank?

The highest-ever quarterly profit also failed to cheer the Street as most experts believe the stock valuations are too high and that the risk-reward is better in other stocks.

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