AU SFB Q2 FY27 standalone PAT jumps 53% YoY to ₹858 Cr, tops Street's 20-25% growth call
PAT +52.92% YoY · revenue +24.4% · margins expanding · beat vs street
₹5,611.81 Cr
+24.4% YoY
₹857.69 Cr
+52.92% YoY
13.44%
+2.7pp YoY
₹11.44
AU Small Finance Bank's standalone net profit for Q2 FY27 came in at ₹857.69 Cr, up 52.9% year-on-year from ₹560.87 Cr and up 7.8% sequentially from ₹795.95 Cr in Q1 FY27. This decisively clears the ~20-25% YoY PAT growth our pre-result preview flagged as the Street's bar going in — the quarter is a clear beat on profit growth, not a marginal one. Total income rose 22.2% YoY to ₹6,381.99 Cr, with interest earned up 24.4% YoY to ₹5,611.81 Cr; net interest income (interest earned less interest expended) grew faster still, up 31.5% YoY to ₹2,820.08 Cr, which is the primary driver of the profit beat. No exceptional items sit in either the current or year-ago quarter, so the 52.9% YoY PAT growth is a clean, unadjusted number.
Q2 FY-2027 vs prior quarters
Margins expanded on the bottom line: net profit margin (PAT/total income) rose to 13.44% from 10.74% a year ago and 13.28% last quarter. Operating profit margin (operating profit/interest earned) was roughly flat at 26.97%, against 26.82% a year ago and 27.07% in Q1 — the NPM expansion is coming from controlled provisioning and tax, not a wider operating spread. Provisions fell to ₹359.40 Cr from ₹480.83 Cr a year ago even as the book grew, and asset quality improved on a YoY basis: gross NPA eased to 1.99% from 2.41% a year ago (and from 2.10% in Q1), while net NPA improved YoY to 0.81% from 0.88%, though it ticked up 5bps from Q1's 0.76%. Deposits grew 28.6% YoY to ₹1,70,460 Cr — matching exactly the provisional deposit figure the bank pre-announced on October 3 — and advances grew 28.4% YoY to ₹1,48,508 Cr, putting the loan-to-deposit ratio near 87%. All three reporting segments grew profit before tax strongly YoY: wholesale banking +94.5%, treasury +76.3%, retail banking +69.3%, indicating the growth is broad-based rather than concentrated in one book.
The stock went into the print at ₹932.9, down 10% over the past month of trading.
For context: this is the highest quarterly PAT in the last 6 quarters on our records; revenue is at a 6-quarter high.
What the summary numbers don't show
No exceptional items in either period, so reported growth figures require no adjustment
Full-year ROA target 1.8% (Q1: 1.7%, need 10 bps lift from opex/credit cost). Cost-to-assets <4% for full year (Q1: 4.0%). Long-term AUM growth 2x-2.5x India's nominal GDP. Credit cost normalized ~90 bps (Q1: 0.8%). NIM guidance: no directional outlook; cost of funds bottomed; stable-to-slightly-higher depending on rat
— This quarter: missed
Against management's own prior guidance (from the Q1 FY27 concall), the picture is more mixed than the headline PAT beat suggests. Return on assets (quarterly, un-annualized) was 0.41%, essentially flat with Q1's 0.42% — on a simple annualized basis that puts the run-rate near 1.6-1.7%, which has not closed the gap to the stated full-year 1.8% ROA target that required a 10bps lift from opex and credit cost; if anything the sequential trend moved slightly away from target rather than toward it. An approximate read on opex against average assets puts the cost ratio close to the ~4% Q1 level, keeping the sub-4% full-year cost-to-assets goal in reach but not showing visible improvement yet. No press release or management commentary was available beyond the regulatory outcome letter, which only confirms board approval of the results — there is no qualitative framing from management in this filing to cross-check against the numbers.
W1
NIM trajectory not disclosed in this filing; management had guided cost of funds has bottomed with NIM stable-to-slightly-higher — confirm direction at the concall
W2
ROA needs to climb from the current ~1.6-1.7% annualized run-rate to the stated 1.8% full-year target in H2 — watch opex and credit-cost trend
W3
Net NPA ticked up 5bps QoQ (0.76% to 0.81%) even as gross NPA improved — watch whether this reverses or extends next quarter
Bank has no subsidiary/associate/JV (Note 15), so only a standalone statement exists — no consolidated figures to extract. No exceptional/extraordinary items in either the current or year-ago quarter, so reported growth needs no adjustment. 'Total Expenses' (₹4,868.29 Cr) is the filing's own 'Total Expenditure' line (interest expended + operating expenses) and excludes Provisions & Contingencies (₹359.40 Cr), which sits as a separate line before PBT per the bank's own presentation; totalIncome − totalExpenses − provisions = PBT ties out exactly. Figures cross-checked against prior-quarter and year-ago comparison context (exact match on revenue, PAT, EPS), offsetting some OCR noise in the scanned table labels.
Deposit Momentum Holds—Test of Profitability Pace
After a 37% YoY profit surge in Q1, AU SFB reports on deposit traction and the margin story. Street holds cautious buy; the debate is execution vs valuation.
The Setup
AU Small Finance Bank's Q2 story is written in deposits and the profit trajectory. The provisional September data—already public—shows deposits at ₹1,70,460 Cr, up 28.6% YoY and CASA deposits climbing 29.1% to over ₹50,290 Cr. That's the headline. The real test: can the bank translate deposit scale into sustained margin and profitability growth after Q1's spectacular 37% PAT expansion? The Street is watching three things—whether credit costs stay anchored near 1%, whether NIMs hold despite deposit rate pressure, and whether the shift toward CASA (cheaper funding) offsets retail deposit competition heating up across the sector.
~₹1.70L Cr
Already disclosed: ₹1,70,460 Cr, +28.6% YoY, +8.1% QoQ
~₹50.3k+ Cr
CASA ratio near 29.6% expected; +29.1% YoY growth vs deposits
~20–25% YoY
Q1 pace (+37%) likely moderates; Street expects ROE aim >14% on track
Sub-2.3% gross
Credit quality stable; no fresh stress signals in recent filings
On Track?
AU SFB guided for double-digit deposit growth and ROE above 14% on a full-year basis. Q1's +23.5% deposit growth (June data) and provisional Q2 at +28.6% (Sept) show the bank is running ahead of guidance on volume. The bigger question is profitability: Q1 PAT hit ₹796 Cr (+37% YoY), but the cost-income ratio and NIM trend will signal whether that pace is sustainable or a one-quarter peak. The provisional data already in hand—deposits, CASA—confirms momentum. Results day will reveal the margin story and whether management holds or raises full-year credit cost estimates.
Since Last Quarter
Three material updates in the past six weeks:
Sep 9
RBI nod for ICICI Prudential 9.95% stake
Strategic investor entry; signals confidence in Universal Bank transition
Sep 14
Anil Agarwal appointed Senior Executive Group Head (Commercial & Institutional Banking)
Strengthens wholesale franchise; prepares for larger ticket lending post-UB
Jul 16–Sep 28
New CRO (Amol Padhye, Sep 1), Deputy CEO (Yogesh Jain, Jul 25), re-appt HIA (Vinay Vaish)
Management reshuffling ahead of faster growth; no red flags, routine governance
A Strong vs. Weak Print
Strong Q2: PAT growth above 30% YoY; NIM stable or expanded; CASA ratio near 30% or above; credit costs remain ~1%; loan growth accelerates (wholesale segment contributors visible). Asset quality stays sound (NPA stable, slippages under control). Management reaffirms or raises full-year guidance. Street interprets as trajectory intact and margin headroom available.
Weak Q2: PAT growth slips below 15% YoY (vs. ₹796 Cr in Q1, would imply ₹~630–680 Cr); NIM compresses more than expected; CASA ratio flat or falls below 29%; credit costs tick up toward 1.2%; loan growth lags deposits, signaling deployment challenges or risk appetite constraints. Asset quality deteriorates (NPA creeps toward 2.5%). Management guides conservatively on FY27 ROE or credit cost. Market reprices execution risk.
1 · Net Interest Margin trend
Did NIM expand or compress QoQ? The cost of CASA deposits is still rising; watch whether asset yields held or fell. If NIMs are under 3.8%, the market may see margin cracks.
2 · Loan-to-deposit ratio and wholesale growth
With deposits +28.6%, are loans keeping pace? Slower loan growth might signal caution or deployment constraints. Wholesale / institutional segment (newly headed by Agarwal) is the watch—any pickup signals confidence in post-UB franchise.
3 · FY27 guidance reiteration or change
Full-year ROE, credit cost, and deposit growth guidance. Any raise on ROE or deposit growth would be a green light; any cut, especially to credit cost, signals headwinds. Management tone on margin trajectory and profitability acceleration is the tell.
AU SFB enters Q2 earnings on deposit momentum—28.6% growth and CASA traction are givens. The print will hinge on margins and the profit pace. Q1's 37% PAT growth is unlikely to repeat, but double-digit profit growth and stable NIMs would confirm the bank is tracking its medium-term ROE aim. The Street holds cautious buy (53.6% of 28 analysts), with consensus TP at ₹1,148, implying 16% upside—modest but grounded in a transition story (Universal Bank), a strategic backer (ICICI Prudential), and retail loan tailwinds. Watch NIM, loan deployment, and management's full-year stance. On October 24, the result will either confirm that scale and profitability can grow together, or raise questions about margin durability in a competitive deposit market.