Accumulate Equitas Small Finance Bank; target of Rs 57: Geojit

Geojit's research report on Equitas Small Finance Bank

Equitas Small Finance Bank (ESFBL) is the second-largest SFB in India in terms of total advances as of FY22. ESFBL, located across 17 states and UTs, serves through 887 banking outlets. Total advances grew by 20% YoY as disbursements for the quarter grew 22% YoY, led by housing and vehicle finance. Total deposits of the bank grew by 205% YoY to Rs.21,726cr. CASA ratio of the bank stands at 48%. With 26% YoY growth in NII and lower provisioning, the net profit of the bank grew by 183% YoY and 20% sequentially. Asset quality improved during the quarter, with GNPA/NNPA declining to 3.99%/1.97% compared to 4.18%/2.15% during previous quarter. Management expects advances to grow at 25% and credit cost to be brought down to 1.5% in FY23.

Outlook

We value the stock at 1.5x FY24E Adj. BVPS to arrive at a target price of Rs.57 and recommend an Accumulate rating.

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