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Investing.com - Kotak has downgraded AU Small Finance Bank Ltd (NSE:AUFI) (NSE:AUBANK) to Sell from Add while raising its price target to INR700.00 from INR650.00.
The downgrade comes despite the higher price target, with Kotak analyst Ashlesh Sonje citing a less attractive risk-reward proposition following the recent stock price rally.
Kotak noted that while challenges in unsecured businesses have hurt AU Small Finance Bank’s profitability in FY2025, these issues are expected to be resolved in FY2026E.
The research firm acknowledged that if macroeconomic conditions improve, AUBANK could deliver business growth that outpaces peer banks.
Kotak indicated a preference for playing the cyclical recovery trade through other stocks with relatively inexpensive valuations rather than continuing to recommend AUBANK at current levels.
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