Target: ₹236
CMP: ₹132.05
Suryoday Small Finance Bank is entering a multi-year transformation phase, evolving from a high-yield granular lender into a more balanced, digital-first micro-banking platform. The strategy is anchored around three pillars: scaling Individual Lending (now about 70 per cent of Inclusive Finance), building out secured retail assets (55 per cent of advances), and leveraging its digital stack to drive deposit growth and lower acquisition costs.
Q3FY26 marked a clear operational inflection for Suryoday, with advances up about 7 per cent q-o-q and earnings rising around 20 per cent, driven by improving collections and expansion in the paying book. NIMs expanded sharply by 40 bps to 7.3 per cent, aided by lower interest reversals, higher unsecured portfolio finance, CRR cuts, and better balance sheet utilisation, while CASA growth outpaced overall deposit growth, strengthening the liability mix.
The bank’s technology-led distribution is emerging as a key differentiator, enabling faster growth, improved asset granularity and structurally better operating leverage. With management targeting mid-teen ROEs (we assume low-teens) alongside over 25 growth, Suryoday’s deliberate shift toward secured products, de-risked MFI and deeper deposit franchise positions it for sustainable profitability.
We reiterate our Buy rating and retain Suryoday as a top pick within the SFB space, valuing it at an undemanding 1.0x FY28E ABV to arrive at a target price of ₹236.
Published on January 28, 2026
