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Motilal Oswal Report
In Q1 FY24, Equitas Small Finance Bank Ltd. reported 97% YoY growth in profit after tax to Rs 1.9 billion (9% beat). This was primarily driven by a 52% QoQ reduction in provisions.
The business growth of Equitas Small Finance Bank was robust at 36% YoY growth in AUM amounting to Rs 296 billion.
This growth was driven by strong traction across various segments of the bank. Housing finance posted a growth of 12% QoQ. Deposits sustained momentum with a 9% sequential growth.
On the asset quality front, slippages increased along with modest recovery and upgrades, resulting in gross and net non-performing asset ratios remaining stable at 2.8% and 1.2%, respectively.
Provision coverage ratio improved 89 bp to 57.8%. 31-90 days past due book remains stable at 3.24% in Q1 FY24.
We maintain our earnings estimate and project a return on asset/return on equity of 2.0%/15.7% for FY25E.
We reiterate our 'Buy' rating on the stock.
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