Motilal Oswal is bullish on Equitas Holdings has recommended buy rating on the stock with a target price of Rs 65 in its research report dated May 17, 2020.
Motilal Oswal 's research report on Equitas Holdings
In 4QFY20, EQUITAS provided higher than required provisions toward COVID-19, which affected earnings despite strong NII/PPoP growth. Inspite of the lockdown in the last few days of Mar'20, AUM growth was steady at 31% YoY. We remain cautious of EQUITAS' asset quality trends in the near term as 98.3% of borrowers have availed moratorium (93% of portfolio value). We cut our FY21/FY22E PAT estimate to primarily factor in higher delinquency trend and moderation in loan growth. Maintain Buy.
We estimate credit cost to rise sharply to 2.7% for FY21E. We, thus, cut our PAT estimates by 45%/37% for FY21/FY22E. We revise our TP to INR65 (0.8x FY22 ABV). Maintain Buy.
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