Equitas Small Finance Bank - Factoring In Near-Term Pain: Motilal Oswal

Motilal Oswal Report

Equitas Small Finance Bank Ltd. has demonstrated robust growth with a 26% compound annual growth rate in its loan book and a 38% CAGR in deposits from FY22-FY24, significantly improving its credit-deposit ratio from 102% to 86% and increasing the retail deposit mix to 69%.

Despite current challenges in the MFI sector, where its contribution has decreased to ~17%, the bank's ability to rebound from credit cycles with controlled credit cost suggests potential asset quality improvement from H2 FY25.

The stock has corrected 29% from its January 2024 peak. However, with sustained growth expected, a projected improvement in return on asset to 1.7% by FY26, and a current valuation of 1.2 times FY26 book value, Equitas SFB remains an attractive long-term investment.

We reiterate a Buy rating with a revised target price of Rs 100 (based on 1.6 times FY26E adjusted book value).

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.