Buy Equitas Small Finance Bank, target price Rs 92: ICICI Securities

ICICI Securities has buy call on Equitas Small Finance Bank with a target price of Rs 92. The current market price of Equitas Small Finance Bank Ltd. is Rs 63.45. Time period given by analyst is one year when Equitas Small Finance Bank Ltd. price can reach defined target.

Equitas Small Finance Bank Ltd., incorporated in the year 1993, is a banking company (having a market cap of Rs 7265.97 Crore).

Financials
For the quarter ended 31-03-2021, the company reported a Standalone Total Income of Rs 996.73 Crore, down -.68 % from last quarter Total Income of Rs 1003.54 Crore and up 24.67 % from last year same quarter Total Income of Rs 799.47 Crore. The bank reported net profit after tax of Rs 112.87 Crore in latest quarter.


Investment Rationale
Drop in collections in April/May’21 amid resurgence of covid cases poses near-term asset quality risk. However, resiliency showed by customers during 1st wave, provision buffer at 90bps and calibrated lending (MFI book fell 11% YoY in FY21) reinforce the view that Equitas would navigate the current cycle more effectively than peers. It maintains BUY. Key risk – A) Stress unfolding higher than anticipated and B) deceleration in loan growth.

Promoter/FII Holdings
Promoters held 81.7 per cent stake in the company as of June 30, 2021, while FIIs held 4.1 per cent, DIIs 10 per cent and public and others 4.2 per cent.