Equitas Small Finance Bank jump nearly 5% post Q4 results. Should you buy, sell?

The shares of Equitas Small Finace Bank closed nearly 5 per cent high at BSE in Monday's trade after the bank reported a 58 per cent on-year rise in net profit for the March quarter at ₹190 crore, backed by business expansion and betterment of asset quality.

The shares of Equitas Small Finance Bank closed 4.49 per cent higher at ₹76.12 on BSE. On a year-to-date basis, the stock has surged 27.18 per cent, while it has risen over 47.18 per cent in the last six months.

The net interest income (NII), the difference between interest earned and interest expended, grew by 28 per cent to ₹706.9 crore in the quarter.

Total income during the quarter under review stood at ₹1,394.41 crore as against ₹1,043.97 crore registered in the same period of last year.

The Board of Directors recommended a dividend of Re 1 per equity share.

In the quarter, Equitas saw strong disbursement across all product segments, with the Bank’s flagship product - SBL clocking a YoY disbursement growth of 56%.

As of March 31, 2023, the lender's advances stood at ₹27,861 crore posting a growth of 35 per cent compared to the same period a year ago. Sequentially, the growth was 12 per cent.

Motilal Oswal

Motilal Oswal maintained its Buy rating on Equitas Small Finance Bank with a target price of ₹87.

"Equitas SFB reported a strong quarter with healthy AUM growth across segments. Higher NII and other income boosted earnings, which were utilized to increase the PCR. Margin expanded by 9bp QoQ to 9.1%. Deposits growth was supported by healthy traction in term deposits while the CASA ratio declined. On the asset quality front, collection efficiency remained healthy, along with lower slippages, leading to improvement in asset quality," it said.

Emkay

Emkay retained its buy rating on Equitas Small Finance Bank with a target price of ₹90.

"Post Founder cum MD & CEO’s (Mr Vasudevan) decision to stay back in the bank, the stock had seen a decent run-up. Also, the bank has completed the reverse merger of its holdco – a long-term overhang – and would now apply for a Universal Banking licence, which we believe will be positive for the bank and thus should be an additional catalyst apart from a steady improvement in return ratios," it said.