Equitas Small Finance Bank Limited (ESFBL), originally incorporated as V.A.P. Finance Private Ltd on June 21, 1993, is a mass market focused SFB (Small Finance Bank), catering to financially unserved and underserved customer segments in India. ESFBL is promoted by Equitas Holding Limited (EHL) which commenced its operations as an NBFC in 2007. ESFBL has 856 banking outlets and 322 ATMs spread across 17 states and union territories in India, as of June 2020.
- According to CRISIL Report 2019, ESFBL is the 2nd largest SFB in terms of Assets under management (AUM) and total deposits. Bank's AUM have grown at the rate of 28.8% CAGR over FY17-FY20.
- Deposit/AUM ratio of bank stands at 76% with CASA (Current Account Savings Account) ratio at 20%. 2nd highest CASA ratio and 3rd highest proportion of retail deposits to total deposits among peers.
- ESFBL has significantly reduced its exposure in Micro Finance lending (MFI)to 23% from 46% in FY17, given risks and volatility associated with this business.
- Bank has a diversified portfolio mix with Security based lending (SBL) at 42%, MFI at 23%, Vehicle Finance at 24% to drive expansion of customer base and focus on higher ticket size loans.
- Bank is well capitalized with capital adequacy ratio of 22% (as per June 2020) wherein minimum requirement is 15%.
- At the upper price band of Rs. 33, ESFBL is available at a P/BV of 1.4x based on its book value of Rs. 24.1. Based on FY20 P/BV the issue seems fully priced while the outlook for FY21 is slightly weak given the ongoing interest waiver litigation filed in Supreme Court. In spite of short to medium term concerns, we expect these concerns to normalize by FY22E and so recommend Subscribe with a long-term perspective.
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Shares of Equitas Holdings Ltd was last trading in BSE at Rs.49.95 as compared to the previous close of Rs. 49.95. The total number of shares traded during the day was 138203 in over 1173 trades.
The stock hit an intraday high of Rs. 50.8 and intraday low of 49.65. The net turnover during the day was Rs. 6904443.