The stock hit a three-week high. Analysts point to strong chart patterns, suggesting more upside.
AU Small Finance Bank received an in-principle approval from the Reserve Bank of India (RBI) to become a Universal Bank on Thursday. The approval allows the bank to transition from a “Small Finance Bank” to a “Universal Bank”.
AU Small Finance Bank stock surged 7.6% to hit a three-week high in early trade on Friday. It pared some gains to trend 2% higher at the time of writing.
AU Bank had applied for RBI approval for the transition on September 03, 2024.
What Does This Mean For AU Small Finance Bank?
RBI’s approval will enable AU Small Finance Bank to issue bigger loans, add more customers, and form subsidiaries, all of which are limited for small finance banks.
Small finance banks provide basic banking services to underserved and unserved segments of the population. Their primary focus is on catering to small business owners, marginal and small farmers, unorganized sector entities, and micro, small, and medium enterprises (MSMEs).
What Is The Retail Mood?
Retail sentiment on Stocktwits remained ‘bullish’. It was ‘neutral’ a week ago. It was also among the top trending stocks on the platform.
Technical Outlook
SEBI-registered analyst Prabhat Mittal observed that the stock saw strong gains between March and July, forming a higher-top, higher-bottom pattern on the short-term chart.
AU Small Finance shares have shown resilience in a weak market, taking multiple supports around ₹724 over the past 15 days, signaling underlying strength, Mittal added. It has also crossed its 20-day moving average, further boosting its near-term trading outlook.
Mittal recommends buying in the ₹745 – ₹750 range with a strict stop-loss at ₹719 with upside targets of ₹800 and ₹840.
In an intra-day setup, Vinayak Gautam recommended buying in at ₹743 with a target of ₹775. He cautioned a stop loss at ₹730.
Q1 Earnings Show Financial Stability
The bank reported a 16% rise in net profit to ₹581 crore for the first quarter of FY26. Total income climbed to ₹5,189 crore, up from ₹4,278 crore last year, while net interest income rose to ₹2,045 crore compared with ₹1,921 crore in Q1 FY25.
Year-to-date (YTD), the stock has gained over 35%.
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