Equitas Small Finance Bank - New Products To Support Growth, 2% RoA Deliverable: Axis Securities

Axis Securities Report

Robust growth, improving core fee income profile (with AD-1 license aiding fee income prospects), and steady credit costs should aid earnings traction for the Equitas Small Finance Bank Ltd. as we expect earnings growth of ~28% compound annual growth rate over FY23-26E.

We introduce FY26E estimates and roll forward to September-25E adjusted book value, keeping our valuation multiple unchanged at 2.0 times.

Equitas SFB has run up in the last week (+14%), despite which we believe a diversified and secured loan book, long growth runway and stable asset quality leave some room for further upside.

We maintain our 'Buy' recommendation on the stock with a revised target price of Rs 125, implying an upside of 15% from current market price.

Key risks to our estimates and target price

• The key risk to our estimates remains a slowdown in overall credit growth which could potentially derail our earnings estimates.

• Asset quality challenges in the new segments that the bank plans to roll-out.

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.