Hold Equitas Small Finance Bank: target of Rs 57: ICICI Securities

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ICICI Securities's research report on Equitas Small Finance Bank

Equitas SFB (Equitas)’s financial performance continues to be marred by elevated credit cost and a >20% QoQ decline in the high-yielding MFI portfolio. Thus, Equitas reported its first ever (since 2008) net loss at ~INR 2bn in Q1FY26. While collection efficiency (CE) improved in Jul’25, management highlighted that it shall continue strengthening the balance sheet by up-fronting provision for the rest of FY26. This should result in higher credit cost in FY26 vs. ~3.4% in FY25. Overall, credit growth remained muted at 8% YoY; however, ex-MFI, the portfolio grew by 18% YoY and management highlighted that it shall continue focusing on scaling the non-MFI book.

Outlook

We downgrade to HOLD (from Add) with a revised TP of INR 57 (vs. INR 75), based on 1x on Sep’26E (vs. 1.25x) given subdued profitability in the near term.

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Equitas Small Finance Bank_13082025_ICICI Securities