AU Small Finance Bank‘s September quarter results failed to satisfy D-Street, with the Jaipur-based bank’s shares falling 3.5% on October 20. Credit Suisse said the bank reported moderate operating profitability.

At 10 am, the stock was quoted at Rs 602.45 per share, down 3.75%. The stock rose 7.3% in the past four sessions ahead of the results.

“Uncertainty about inflation, liquidity and interest rates continued to intensify significantly in the operating environment in the September quarter. While the domestic outlook is encouraging, these factors may have a lagged effect on demand and activity levels.

The bank’s net interest income for the quarter rose 44% year-on-year to Rs 1,083 crore. Net profit rose 23% to Rs 343 crore. Net non-performing loans (or bad loans) fell to 0.56% at the end of the quarter, compared to 1.65% a year ago. However, they are still in order.

Analysts at Motilal Oswal Financial Services have a “buy” rating on the stock with a target price of Rs 700: “We estimate the bank will achieve a CAGR of 25% in FY22-24, return on assets/earnings (RoA/ FY24 ROE) of 1.8%/14.9%, respectively.”

Global brokerages Credit Suisse and Morgan Stanley disagree. The former underperformed with a target of Rs 530 per share, while Morgan Stanley’s overweight target was Rs 875.

Morgan Stanley is bullish as asset quality improves and growth remains strong. It expects strong earnings growth over the next two to three years.