AUBANK.NS
AU SMALL FINANCE BANK LTDClosedAUBANK.NS discounted cash flow valuation
AU SMALL FINANCE BANK LTD is a banks - regional company. Its cash flows include lending and deposits, so free cash flow isn't owner earnings and this model can mislead. Compare it with peers on book value and earnings instead.
AUBANK.NS Fair Value
Reverse DCF: today's price implies 29.6% a year of FCF growth for years 1–5, against 23.8% in this model.
Model: 23.8% from analyst next-year EPS & revenue growth. Fades linearly to terminal growth by year 10.
Model: 8.26% (CAPM, see the build-up).
Long-run growth after year 10; keep it at or below nominal GDP.
Value Bridge
| PV of free cash flow, years 1–10 | INR 193.40B |
|---|---|
| PV of terminal value (67% of EV) | INR 399.71B |
| Enterprise value | INR 593.11B |
| + Cash & investments | INR 85.23B |
| − Total debt | −INR 138.72B |
| Equity value | INR 539.63B |
| ÷ Shares outstanding | 749.42M |
| Value per share | INR 720.06 |
| Market cap | INR 749.04B |
Discount Rate Build-up
| Risk-free rate (10-yr Treasury) | 5.22% |
|---|---|
| Beta (clamped 0.5–2.5) | 0.58 |
| Equity risk premium | 5.00% |
| Cost of equity (CAPM) | 8.10% |
| Pre-tax cost of debt | 12.00% |
| Tax rate | 24.0% |
| Debt / (equity + debt) | 15.6% |
| WACC | 8.26% |
Cost of debt is interest expense ÷ total debt, held between the risk-free rate and 12%.
Free Cash Flow: History and Projection
Sensitivity: Value per Share
| WACC ↓ / g → | 1.50% | 2.00% | 2.50% | 3.00% | 3.50% |
|---|---|---|---|---|---|
| 6.26% | 964.83 | 1,069.83 | 1,202.73 | 1,376.38 | 1,612.91 |
| 7.26% | 763.29 | 829.68 | 910.00 | 1,009.15 | 1,134.66 |
| 8.26% | 622.41 | 667.34 | 720.06 | 782.79 | 858.68 |
| 9.26% | 518.66 | 550.59 | 587.23 | 629.71 | 679.55 |
| 10.26% | 439.29 | 462.82 | 489.37 | 519.57 | 554.23 |
Green is above today's price, red below (full colour at ±30%). The outlined centre cell is the current inputs.
Projected Cash Flows
| Year | Growth | Free cash flow | Discount factor | Present value |
|---|---|---|---|---|
| Base (FY2026) | — | INR 10.20B | — | — |
| Year 1 | 23.8% | INR 12.63B | 0.924 | INR 11.67B |
| Year 2 | 23.8% | INR 15.64B | 0.853 | INR 13.34B |
| Year 3 | 23.8% | INR 19.36B | 0.788 | INR 15.26B |
| Year 4 | 23.8% | INR 23.97B | 0.728 | INR 17.45B |
| Year 5 | 23.8% | INR 29.67B | 0.672 | INR 19.95B |
| Year 6 | 19.5% | INR 35.47B | 0.621 | INR 22.03B |
| Year 7 | 15.3% | INR 40.89B | 0.574 | INR 23.46B |
| Year 8 | 11.0% | INR 45.39B | 0.530 | INR 24.06B |
| Year 9 | 6.8% | INR 48.46B | 0.490 | INR 23.72B |
| Year 10 | 2.5% | INR 49.67B | 0.452 | INR 22.46B |
Method
Two-stage free-cash-flow model, the same as the bot's lgf dcf: five years at the chosen growth rate, a straight-line fade to terminal growth by year ten, then a Gordon-growth terminal value. Everything is discounted at WACC.
Base cash flow is the trailing four quarters of operating cash flow minus capital expenditure (the latest fiscal year when quarters are missing). Default growth uses analyst long-term growth when Yahoo publishes it, else the average of next year's EPS and revenue growth, else revenue CAGR, held between −5% and 25%.
A DCF is only as good as its inputs. The terminal value is usually most of the answer, so read the sensitivity grid before the headline number. This is a model, not investment advice.