Equitas Small Finance Bank Ltd, incorporated in the year 1993, is a banking company with a market cap of Rs 6322.99 Crore.
Equitas Small Finance Bank’s key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment and Interest On Balances with RBI and Other Inter-Bank Funds for the year ending 31-Mar-2020.
Investment Rationale
mkay Research likes Equitas for its healthy asset diversification away from the volatile MFI space, best CASA/liability profile among listed SFBs, capital comfort and reasonable valuations. The overhang of promoter stake dilution is largely over with the RBI’s IWG recommendations, while the transition to Universal Banking License from relatively restrictive SFB license should be a long-term positive for the bank.
Research retains buy rating on Equitas SFB with a target price of Rs 74, valuing the bank now at 1.9x FY23E ABV (1.5x earlier), factoring in better return ratios and growth trajectory. According to Emkay, key risks include higher-than-expected NPAs due to the second Covid wave, loss of momentum in CASA flow and management attrition.
Financials
For the quarter ended 31-03-2021, the company has reported a Standalone Total Income of Rs 996.73 Crore, down 0.68 per cent from last quarter’s Total Income of Rs 1003.54 Crore and up 24.67 per cent from last year same quarter Total Income of Rs 799.47 Crore. The bank has reported a net profit after tax of Rs 112.87 Crore in the latest quarter.
