Equitas Small Finance Bank - Growth Outlook Steady; RoA To Sustain At ~2%: Motilal Oswal

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Motilal Oswal Report.Equitas Small Finance Bank Ltd. has been delivering consistent performance, with steady improvements in both asset quality and return ratios. The bank is well poised to report steady operating performance, backed by robust loan growth, healthy margins, and controlled credit costs. The bank focuses on building a diversified loan book, with small business loans, vehicle finance, and housing finance being the key business segments. Loan growth was strong at ~25% YoY in 9M FY24 and we estimate a 22% compound annual growth rate in loans over FY24-26E. Equitas Small Finance Bank has made good progress in building a granular liability franchise, with a rising mix of retail deposits. Also, the credit-deposit ratio of the bank remains comfortable at 90% (versus ~99.5% in Q3 FY23). We expect deposit traction to remain strong, led by healthy growth in retail term deposits, while current account and savings account mix declines further. Asset quality has improved steadily with gross/net-non performing asset ratios moderating to 2.5%/1.1% as of Q3 FY24. We expect asset quality ratios to improve further and expect provision coverage ratio to improve to 61% by FY26 from 56% currently. We estimate Equitas SFB to deliver FY26E return on asset/return on equity of 2.0%/17.3% and value it at Rs 125 (1.9 times FY26E adjusted book value). Reiterate Buy..Click on the attachment to read the full report:.Infosys Q4 Results Review - Modest FY25 Guidance To Weigh On Near-Term Returns: Motilal Oswal.DISCLAIMERThis 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.

Equitas Small Finance Bank - Growth Outlook Steady; RoA To Sustain At ~2%: Motilal Oswal

Estimate 24% earnings compound annual growth rate over FY24-26

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