KR Choksey IPO report on Equitas Small Finance Bank
Equitas Small Finance Bank (ESFB) is a wholly owned subsidiary of Equitas Holdings Limited (EHL) launched in September 2016, as promoters had received RBI in-principle approval to establish a Small Finance Bank (SFB). It has a diversified business across small business loans, microfinance, vehicle finance & MSE Finance & NBFCs while having strong retail deposits (CASA + Term deposits). It also offers third party products like insurance, FASTag for toll plazas and asset management in mutual funds and xPMS. It has 856 banking outlets and 322 ATMs spread across 17 states and union territories in India. As on Jun’20, bank’s employee base was at 15,843 while borrowers and depositors were at 2.7 mn/0.9 mn, respectively.
Valuation and Outlook
Strong fundamental performance and adequate liquidity position provides an opportunity to grow business in future. The bank is being issued at valuation of ~1.23x P/BV at upper price band of INR 33 as on Q1FY21. We have a long term positive view on the stock and recommend SUBSCRIBE for the issue.
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