Equitas Small Finance Bank Q1 profit jumps 97% YoY to Rs 191 crore; Stock reacts positively

Shares of Equitas Small Finance Bank jumped 1.5 percent in trade on July 31 post solid Q1 numbers. At 11:04 am the Equitas Small Finance Bank stock was trading 0.45 percent higher at Rs 99.6 on NSE.

The small finance bank has recorded a profit of Rs 191 crore for the June FY24 quarter, rising 97 percent over the corresponding period last fiscal, driven by lower provisions. Net interest income during the quarter grew by 28 percent YoY to Rs 743 crore, with advances as well as deposits growing 36 percent each YoY the bank stated in a BSE filing on July 28. Asset quality remained stable with gross NPAs falling 1 basis point QoQ to 2.75 percent and net NPAs declining 3 bps QoQ to 1.18 percent for the quarter.

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The bank further discussed in the regulatory filing that its credit growth continues to remain strong with ‘advances’ growing at 36 percent year-on-year and 6 percent quarter-on-quarter to Rs 29,601 crore. During the quarter under review, the bank said it registered strong disbursements growth of 47 percent year-on-year to Rs 4,757 crore. Deposits grew by 36 percent year-on-year and 9 percent quarter-on-quarter to reach Rs 27,709 crore.

Management Commentary

Commenting on the bank’s performance, Managing Director and CEO P N Vasudevan said, “The bank has now consistently delivered to a 2 percent plus ROA (Return on Assets) and 15 percent ROE (Return on Equity) over the past three quarters back by a strong credit growth, continued traction in retail deposits and a favorable credit cycle in urban and rural geographies.”

“We firmly believe over the past 7 years the bank has created a strong franchise which is stable, scalable and sustainable and now aspires to convert to a universal bank,” he said.

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“Our investments in technology continue to progress well, the impact of which should be felt in the coming few years,” he added.

Brokerage Views

Brokerage firm Motilal Oswal is bullish on Equitas Small Finance Bank, and they have recommended a ‘buy’ rating on the stock with a target price of Rs 105 in its research report dated June 23, 2023.

Stock Performance

Equitas Small Finance Bank stock has given a return of 82.23 percent over the last six months. Thus, has outperformed the benchmark Nifty Bank index by a considerable margin as the benchmark index has given a return of 11.92 percent over the same duration.

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