Initiate coverage with NEUTRAL and a TP of Rs 530 (5.2x FY20E ABV, 31x FY20E EPS). Faster growth and fund raising at high valuations are typically book value accretive and rewarding for shareholders, as seen in lenders like Bajaj Finance, IndusInd Bank, Kotak, etc. However, with AU adequately capitalised for the next two to three years (Tier 1 ~18.9%), this upside may not materialise immediately. AU Small Finance Bank (AU) was an NBFC till Mar-17. Its loan portfolio of Rs 108bn (Jun-17) is well-diversified across Vehicle Finance (VF), MSME and SME loans. AUs lending is focussed on underserved segments in urban, semi-urban and rural India, and offers investors multi-year growth opportunities. While headline valuations appear stiff (5.6x FY20E ABV), underlying business opportunities and management strengths are strong.