A prominent banking stock came into focus after Tata AIG General Insurance acquired a stake worth Rs.62.45 crore through open market transactions. The development has sparked renewed investor interest, with market participants closely tracking the stock’s movement following the strategic investment.
During Tuesday’s trading session, the shares of AU Small Finance Bank Ltd reached an intraday high of Rs.728.60 per share, rising slightly from the previous close of Rs.718.65 per share. The shares have retreated from the peak and are trading at Rs.725.95 apiece. Over the past five years, the shares delivered over 200 percent returns.
Bulk Deal
On June 2, 2025, Tata AIG General Insurance Co. Ltd. acquired a significant stake in AU Small Finance Bank Ltd through a block deal on the NSE. The company purchased 9,01,261 shares at an average price of Rs.693 per share, amounting to a total investment of approximately Rs.62.45 crore.
The shares were offloaded by LeapFrog Rural Inclusion (India) Limited, which sold an identical quantity through the same block deal. This exchange of hands between institutional investors has brought the stock into sharp market focus, signaling growing confidence from domestic insurers in the banking sector’s long-term growth potential.
Business Highlights
The bank posted a robust 27 percent YoY deposit growth to Rs.1.24 lakh crore, outperforming the sector average of 10.1 percent. Current deposits rose by 28 percent and savings deposits by 12 percent. Loan book expanded by 20 percent to Rs.1.16 lakh crore, driven by retail secured and commercial banking growth, despite an 18 percent drop in unsecured loans.
Profitability remained strong with a RoA of 1.5 percent, even amid higher credit costs and improved provisioning. PPoP grew 86 percent YoY, with the PPoP-to-average-assets ratio rising to 3.3 percent from 2.5 percent. EPS and BVPS grew by 19 percent and 23 percent respectively.
Operational efficiency improved, with the cost-to-income ratio dropping to 57 percent from 64 percent in FY24. The bank completed the integration of Fincare branches, with full IT alignment in progress. It also applied for a Universal Banking License in September 2024, and RBI’s review is currently underway.
Financial Performance
According to its latest financial results, AU Small Finance Bank Ltd reported a consolidated revenue of Rs.4,271 crores in Q4 FY25, marking a 50.9 percent increase from Rs.2,830 crores in Q4 FY24 and a 4 percent rise from Rs.4,113 crores in Q3 FY25.
Despite robust revenue growth, the bank’s net profit declined to Rs.504 crores in Q4 FY25, down 4.5 percent from Rs.528 crores in the preceding quarter, although it still marked a 35.8 percent rise from Rs.371 crores in Q4 FY24. As of the latest quarter, Gross NPA stood at Rs.2,477.03 crores, while Net NPA was reported at Rs.791.34 crores.
The company has a Return on Capital Employed (ROCE) of 3.67 percent and a Return on Equity (ROE) of 12.27 percent. Its Price-to-Earnings (P/E) ratio stands at 24.52, higher than the industry average of 17.17. Furthermore, the company maintains a CASA (Current Account and Savings Account) ratio of 33 and an Earnings Per Share (EPS) of Rs.28.27.
Written by – Siddesh S Raskar
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