Equitas Small Finance Bank Ltd. share price target

We maintain our BUY rating on the stock and value EQSFB at 2.1x FY23E ABV to arrive at a target price of Rs 76/share, implying an upside of 21% from CMP.

We maintain a BUY on the stock and value it at 1.9x FY23E ABV to arrive at a target price of Rs 70, implying an upside of 26% from CMP.

Based on the above themes we recommend the following stocks: ICICI Bank, SBI, Equitas SFB, Federal Bank, Bharti Airtel, HCL Tech, Tech Mahindra, Varun Beverages, Relaxo Footwears, Amber Enterprises, Camlin Fine Science, Minda Industries, Steel Strip Wheels. Lupin & ACC

We value EQSFB at 1.9x P/ABV on FY23E ABV and arrive at a target price of Rs 72, implying an upside of 21% from CMP.

The continued traction in the liability franchise, shift towards a more secured book along with control over opex augur well for the bank. We maintain a BUY on the stock with a target price of Rs. 46. (1.3x FY23E ABV).

Strong non-microfinance led AUM growth, ramp-up in low-cost deposits on the back of a revamped liability strategy, visibility in improvement in ROA/ROE to upwards of 2%/16% resp. in the long term with operating leverage kicking in and an experienced and competent management are key positives.

Equitas Small Finance Bank Limited - IPO Note Issue Open: Oct 20 Oct 22, 2020 Price Band: Rs. 32 33 Issue Size: 156,848,485 eq shares (Fresh Issue of 84,848,485 eq sh + Offer for Sale of 72,000,000 eq sh ) Issue Size: Rs. 501.9 517.6 cr Reservation for: QIB Upto 50% eq sh Non Institutional atleast 15% eq sh Retail atleast 35% eq sh Employee Reservation: Rs.1 cr EHL Shareholder Reservation: Rs 51.0 cr Face Value: Rs 10 Book value: Rs 26.47 (June 30, 2020) Bid size: - 450 equity shares and in multiples thereof

IPO NOTE

The Promoter of Equitas Small Finance Bank (ESFB) i.e. Equitas Holdings Limited (EHL) was granted the RBI Final Approval on June 30, 2016, to establish a Small Finance Bank (SFB). Subsequently, the Bank was converted to a SFB and it commenced operations on September 05, 2016. Market outlook and valuation: At the upper end