AU SFB, SBFC Finance, L&T Finance, BHFL, City Union Bank, UTI AMC: Stocks to buy for up to 37% upside

ICICI Securities Ltd has come out with individual reports on many banking and financial institutions including AU Small Finance Bank Ltd (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), with either 'Add' or 'Buy' ratings and target prices suggesting up to 37 per cent potential upsides.  

AU Small Financial Bank Ltd | Rating: Buy | Target: Rs 1,250 | Upside potential: 20%
ICICI Securities said AU Small Finance Bank concluded FY26 on a robust note, establishing a solid trajectory for FY27 underpinned by strengthening asset quality and a resurgence in credit momentum. Key performance indicators transitioned toward normalcy, it said noting that credit costs receding less than 1 per cent for the first time post-merger and providing a clear signal of stabilisation within the MFI and unsecured loan portfolios. 

"Gross slippage ratio of less than 2 per cent also reflects normalising incremental stressed asset formation. While NIM expanded 24bps QoQ during Q4FY26, management cautioned that current levels are aided by seasonal factors, suggesting a more normalised margin profile ahead. Despite this, AU SFB remains committed to a FY27 RoA target of 1.8 per cent, driven by operating efficiencies and moderated credit costs," ICICI Securities said.
 
SBFC Finance Ltd | Rating: Buy | Target: Rs 130 | Upside potential: 37%
ICICI Securities said SBFC Finance (SBFC) continued to execute on its medium-term guidance, evidenced in its robust return on equity (RoE) expansion to 14.5 per cent in Q4FY26, a 100 basis points YoY improvement. 

The profitability enhancement was underpinned by operational efficiencies, with cost to assets declining 80 basis points YoY and higher spread, effectively offsetting 35bps of uptick in credit cost during Q4FY26. 

"While management is mindful of potential headwinds from geopolitical volatility on its target segments, high-frequency data remains encouraging; cheque bounce rates for April 2026 trended marginally lower against March 2026 levels, signalling no immediate asset quality stress," ICICI Securities said.

L&T Finance Holdings Ltd | Rating: ADD | Target: Rs 315 | Upside potential: 9%

L&T Finance Ltd, after Lakshya 2026, unveiled its next 5-year strategic plan titled ‘Lakshya 2031’. The plan sought to deliver over 20 per cent book growth, less than 2 per cent credit cost, a 300-320 basis-point RoA expansion and 16-18 per cent RoE. 

"For the March quarter, L&T Finance reported RoA/RoE of 2.4 per cent/11.7 per cent, a tad higher than our estimate. Its superior performance (vs peers) in the latest RBF (rural business finance) over-leveraging cycle is testament to its prudent underwriting practices. Ahead, Project Cyclops/Nostradamus could help LTF bolster its structural credit cost improvement while aiding sustained and improving performance on the profitability front," ICICI Securities said.

City Union Bank Ltd | Rating: Buy | Target: Rs 325 | Upside potential: 20%
ICICI Securities said City Union Bank (CUBK) reported strong Q4FY26 with loan growth at fresh highs, stable NIM and RoA and a multi-year improvement in gross non-performing assets, summing up to be a commendable farewell quarter for the incumbent MD & CEO. Loan growth, it said, jumped to 26 per cent YoY, led by gold loans. 

The domestic brokerage said a strong top-line percolated to a robust PPOP, noting that the City Union Bank has guided for stable NIM YoY and 10–15 bps of RoA improvement to 1.65–1.7 per cent by Q4FY27. 

"The bank highlighted its conservativism on limiting its per gram gold price – detached from the jump in market prices. While noting macro uncertainties, CUBK pointed to current SMA 2 (0.7 per cent) and SMA 0+1+2 being at multi-year lows. Retain BUY; target price intact at Rs 325," ICICI Securities noted. 

UTI AMC | Rating: ADD | Target: Rs 1,040 | Upside potential: 12%
ICICI Securities said UTI AMC has fared better than peers when it comes to cost, considering a 5.9 per cent standalone opex compounded annual growth rate (CAGR) of FY22–26. However, its subsidiaries’ performance has been weak, with an opex CAGR of 17 per cent and absolute PAT CAGR of -40 per cent in FY22–26. 

"Additionally, market share loss across equity AUM (20bps in FY26) and systematic flows (18bps in FY26) remains an overhang. Its valuation remains attractive at 12 times FY28E core PAT," it said.

Bajaj Housing Finance Ltd | Buy | Target price: Rs 125 | Upside: 37%
ICICI Securities, which has a target price of Rs 125 on BHFL, said the HFC's Q4 performance was steady, with return on asset (RoA) and return on equity (RoE) at 2.2 per cent and 12 per cent, respectively—aligning with both management guidance and eight-quarter average. 

"While intensified competition in the prime housing segment continued to pressure NIM, resulting in a flat sequential PAT, management remains optimistic about maintaining a 2.0–2.2 per cent RoA for FY27. Improved operational efficiencies and moderated credit costs are likely to offset near-term spread compression and support RoA," ICICI Securities said.