In a recent analysis, ICICI Securities Ltd. has recommended 'Buy' or 'Add' ratings for several prominent banking and financial institutions, projecting potential upsides of up to 37% for investors. The recommendations cover AU Small Finance Bank Ltd (AU SFB), SBFC Finance Ltd, L&T Finance Holdings Ltd, Bajaj Housing Finance Ltd (BHFL), City Union Bank, and UTI Asset Under Management Company Ltd (UTI AMC).
Key Stock Recommendations and Outlook
The brokerage firm provided individual reports detailing the performance and future outlook for each company, highlighting their strengths and growth trajectories.
AU Small Finance Bank Ltd (AU SFB)
ICICI Securities rated AU SFB a 'Buy' with a target price of Rs 1,250, indicating a potential 20% upside. The bank concluded FY26 strongly, setting a robust path for FY27, driven by improving asset quality and renewed credit momentum. Key performance indicators normalized, with credit costs falling below 1% for the first time post-merger, signaling stabilization in its MFI and unsecured loan portfolios. Despite management cautioning that current Net Interest Margin (NIM) levels are aided by seasonal factors, AU SFB remains committed to an FY27 Return on Assets (RoA) target of 1.8% through operational efficiencies and moderated credit costs.
SBFC Finance Ltd
SBFC Finance received a 'Buy' rating with a target price of Rs 130, suggesting a significant 37% upside. The company continued to meet its medium-term guidance, evidenced by a strong Return on Equity (RoE) expansion to 14.5% in Q4FY26, a 100 basis points year-on-year improvement. This profitability was supported by operational efficiencies and higher spreads, effectively offsetting a 35bps increase in credit costs. Management remains vigilant regarding geopolitical volatility, but high-frequency data, such as marginally lower cheque bounce rates in April 2026, indicates no immediate asset quality stress.
L&T Finance Holdings Ltd
L&T Finance was given an 'Add' rating with a target price of Rs 315, implying a 9% upside. Following its 'Lakshya 2026' plan, the company unveiled 'Lakshya 2031,' a new five-year strategic plan. This plan aims for over 20% book growth, less than 2% credit cost, a 300-320 basis-point RoA expansion, and 16-18% RoE. For the March quarter, L&T Finance reported RoA/RoE of 2.4%/11.7%, slightly above estimates. Its strong performance in the rural business finance sector underscores its prudent underwriting practices.
City Union Bank Ltd (CUBK)
City Union Bank garnered a 'Buy' rating with a target price of Rs 325, projecting a 20% upside. The bank reported a strong Q4FY26, characterized by record loan growth, stable NIM and RoA, and a multi-year improvement in gross non-performing assets. Loan growth surged to 26% year-on-year, primarily driven by gold loans. The bank has guided for stable NIM year-on-year and a 10–15 bps RoA improvement to 1.65–1.7% by Q4FY27, while maintaining a conservative approach to gold loan pricing despite market price jumps.
UTI Asset Under Management Company Ltd (UTI AMC)
UTI AMC received an 'Add' rating with a target price of Rs 1,040, indicating a 12% upside. ICICI Securities noted that UTI AMC has performed better than peers in cost management, with a 5.9% standalone operating expenditure compounded annual growth rate (CAGR) from FY22–26. However, its subsidiaries showed weaker performance. The report also highlighted a market share loss in equity AUM and systematic flows as an ongoing concern, though its valuation at 12 times FY28E core PAT remains attractive.
Bajaj Housing Finance Ltd (BHFL)
Bajaj Housing Finance was assigned a 'Buy' rating with a target price of Rs 125, suggesting a 37% upside. BHFL's Q4 performance was steady, with RoA and RoE at 2.2% and 12%, respectively, aligning with management guidance. Despite intense competition in the prime housing segment pressuring NIMs, management is optimistic about maintaining a 2.0–2.2% RoA for FY27. Improved operational efficiencies and moderated credit costs are expected to offset near-term spread compression.
Disclaimer: This report is based on analysis by ICICI Securities and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.