July 13, 2024

Motilal Oswal’s analysis report on Equitas Small Finance

Equitas Small Finance Financial institution (EQUITASB) reported in-line earnings for 3QFY24 at INR2b (up 18.7% YoY). PPoP grew 29% YoY (up 9% QoQ, in line), led by excessive different earnings. AUM development was regular at 32% YoY/5% QoQ to INR328b, pushed by wholesome traction in a lot of the segments (barring NBFC). The administration expects credit score development to stay strong at 25-28% in FY24. Deposit development was strong at 38% YoY/5% QoQ, led by quicker development in TDs. The CASA combine moderated 85bp QoQ to 32.7%. The price of funds, thus, rose 15bp QoQ to 7.4%, resulting in a 6bp drop in NIMs to eight.37%. Slippages had been elevated primarily on account of increased slippages from automobile finance and micro finance. GNPA/NNPA ratios elevated 26bp/16bp QoQ to 2.53%/1.13%. PCR declined barely to 56%.

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Outlook

We preserve our FY24E/FY25E EPS and estimate FY25 RoA/RoE of 1.9%/15.3%. Preserve BUY with a TP of INR125 (2.0x Sep’25E ABV).

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Equitas Small Finance – 2912024 – moti