Buy Equitas Holdings; target of Rs 150: Motilal Oswal

Motilal Oswal's research report on Equitas Holdings

Equitas reported PPoP growth of 198%/14% YoY/QoQ to INR1.2b (largely in line with our estimates), driven by 37%/16% YoY/QoQ growth in NII. Lending spreads improved 49bp QoQ to 11.2%, while NIM stood at 8.98% (+128bp QoQ) on the back of 62bp improvement in cost of funds. Total opex grew 17%/12% YoY/QoQ to INR2.6b (5% above MOSLe) led by 40% YoY growth in other opex (paid PSLC premium of INR238m). Cost-income ratio, thus, remains elevated at 68.2% (39bp QoQ decline).

Outlook

We reiterate BUY with a target price of INR150, based on 1.9x Sep-20E ABV of INR81 per share.