Equitas Small Finance Bank Ltd. share price target

Rising share of diversified and secured portfolio with MFI mix likely to decline further; scaling up granular deposit franchise

We maintain our HOLD recommendation on the stock.

Equitas SFB (EQUITASB) reported 3QFY25 PAT of ~INR663m (-67% YoY; 17% miss to MOFSLe) amid lower other income, partially offset by slightly lower provisions.

We maintain our HOLD recommendation on the stock.

Equitas SFB (EQUITASB) reported 2QFY25 PAT of ~INR129m (-93.5% YoY; 93% miss on MOFSLe) as the bank made additional provision of INR1.46b toward the MFI segment.

Equitas Small Finance Bank (EQUITASB) has demonstrated a strong business growth trajectory with a 26% CAGR in its loan book and 38% CAGR in deposits from FY22-FY24.

We revise our recommendation to HOLD from BUY earlier.

Equitas SFB (EQUITASB) reported a 1QFY25 PAT of ~INR0.3b (-87% YoY), 85% lower than MOFSLe amid higher floating provisions, as the bank reduced its NNPA to <1% and raised PCR to >70%.

Equitas SFB (Equitas) delivered 1.9% RoA in Q4FY24 and 2.0% in FY24 vs. 1.89% in FY23 – largely driven by credit cost normalisation on full year basis. However, steady NIM contraction during FY24, due to rising cost of funds resulting from increasing rate cycle and higher proportion of fixed rate assets (~85%) raised concerns over RoA sustainability.

Equitas SFB continues to report subdued credit growth at 20% YoY mainly due
to slower growth in the new CV and NBFC segments, which coupled with
elevated funding cost has led to further deterioration in NIM by 20bps QoQ to
8.2%.

Equitas SFB (EQUITASB) reported in-line earnings for 4QFY24 at INR2.08b
(up 9.3% YoY). However, adjusted for one-off items, the bank reported a
PAT of INR2.33b

We maintain our BUY recommendation on the stock.

EQUITASB has been delivering consistent performance, with steady
improvements in both asset quality and return ratios. The bank is well poised to
report steady operating performance, backed by robust loan growth, healthy
margins, and controlled credit costs.

We maintain our BUY recommendation on the stock.

We recommend a BUY rating on the stock with a TP of Rs 125, implying an upside of 10% from CMP. .

Equitas Small Finance Bank (EQUITASB) is the second largest small finance bank (SFB) with a Balance Sheet of INR401bn.

We maintain our BUY recommendation on the stock with a revised target price of Rs 125, implying an upside of 15% from CMP.