Dec 01, 2016 12:39 PM IST IST | Source: Moneycontrol.com
Buy Equitas Holdings; target of Rs 215: Axis Direct
Axis Direct is bullish on Equitas Holdings has recommended buy rating on the stock with a target price of Rs 215 in its research report dated November 29, 2016.
Axis Direct's research report on Equitas Holdings
We interacted with the senior management of Equitas to assess the impact of demonetization on its business. Equitas transitioned into a small finance bank in Q2FY17, and as a bank could accept deposits in the form of demonetized 500/1000 rupee notes. This drove 100% collection efficiency across key segments. 100% of MFI, 60% of UCV and negligible MSE collections are in cash.
Equitas may not face any strain on asset quality due to proactive collection efforts, but there are still a couple of minor negatives: (1) cash disbursements in MFI segment have almost stopped;(2) having only 5liability branches operational meant Equitas missed out on an opportunity to garner large, low-cost deposits. Growth will remain a challenge since most of low-ticket size disbursements in the MFI segment (50% of AUM) are in cash and will be impacted by currency crunch.
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