---
title: "Buy AU Small Finance Bank; target of Rs 1250: Motilal Oswal"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/278485754.md"
description: "Motilal Oswal recommends buying AU Small Finance Bank (AUBANK) with a target price of Rs 1250. AUBANK has transitioned from a niche vehicle finance NBFC to a diversified banking franchise, aiming for universal bank status. The bank is a leader in the SFB space, with a market cap over twice that of its peers. It is expected to achieve a 24% loan CAGR and a 36% earnings CAGR from FY26-28, with improving profitability metrics. Key growth drivers include lower costs and the transition to universal banking."
datetime: "2026-03-10T03:31:02.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/278485754.md)
  - [en](https://longbridge.com/en/news/278485754.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/278485754.md)
generator: "portal-rs"
---

# Buy AU Small Finance Bank; target of Rs 1250: Motilal Oswal

**Motilal Oswal's research report on AU Small Finance Bank**

AU Small Finance Bank (AUBANK) has successfully transitioned from a niche vehiclefinance NBFC into a diversified, pan-India banking franchise, set to attain universal bank status. This marks a shift from asset-led growth to a scalable, diversified, and structurally stronger compounding franchise with enhanced credibility and funding access. The bank has established itself as the clear leader in the SFB space, with M-cap over 2x that of all SFB peers combined, supported by superior scale and consistent profitability. With a strong SFB platform already built, the transition to a universal bank unlocks larger growth opportunities while providing greater portfolio flexibility and the potential for stronger returns. We estimate AUBANK to deliver ~24% loan CAGR over FY26-28, which, combined with improving operating metrics, should translate into ~36% earnings CAGR over the same period, reinforcing the bank’s trajectory toward stronger profitability. RoA/RoE for FY27 are likely to improve to 1.74%/17.2%, respectively.

**Outlook**

Reiterate BUY with a TP of INR1,250 (3.7x Sep’27E ABV). Key upside triggers include accelerating earnings momentum driven by lower CoF and credit costs, a potential capital raise in FY27, and the transition to universal banking, following RBI’s relaxation of the earlier NOFHC stipulation for promoter shareholding, thereby simplifying the ownership structure and removing a key overhang.

**For all recommendations report, click here**

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

AU Small Finance Bank - 1003026 - moti

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> **Disclaimer: This article is for reference only and does not constitute any investment advice.**