Buy Equitas Holdings; target of Rs 65: Motilal Oswal

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Motilal Oswal 's research report on Equitas Holdings

EQUITAS has provided the ‘Opt-out’ facility to all customers under moratorium 1.0 due to the strict lockdown, which impacted customers severely. However, the ‘Opt-in’ facility has been provided under moratorium 2.0 as lockdown restrictions eased and economic activity picked up. In the MFI business, ~56% centers opted for moratorium as at Jun’20. Further, the percentage of loan portfolio availed moratorium in other segments: ~42% in Small business loans, ~69% in Vehicle loans and ~96% in Small corporate portfolio while all NBFC customers paid Jun’20 EMIs.

Outlook

We maintain a cautious stance on EQUITAS’ asset quality and expect credit cost to rise over FY21/FY22E. We maintain our TP of INR65 (0.8x FY22E ABV) with a Buy rating.

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