07 Dec , 2021 By : monika singh
Axis Securities has buy call on Equitas Small Finance Bank with a target price of Rs 78. The current market price of Equitas Small Finance Bank is Rs 61.2. Time period given by analyst is one year when Equitas Small Finance Bank Ltd. price can reach defined target.
Equitas Small Finance Bank Ltd., incorporated in the year 1993, is a banking company (having a market cap of Rs 7020.02 Crore).
Equitas Small Finance Bank Ltd. key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment and Interest On Balances with RBI and Other Inter-Bank Funds for the year ending 31-Mar-2021.
Financials
For the quarter ended 30-09-2021, the company reported a Standalone Total Income of Rs 991.40 Crore, up 7.46 % from last quarter Total Income of Rs 922.59 Crore and up 15.11 % from last year same quarter Total Income of Rs 861.23 Crore. The bank reported net profit after tax of Rs 41.19 Crore in latest quarter.
Investment Rationale
The brokerage believes EQSFB is eligible for re-rating given its improving profitability, asset quality, and return ratios. The bank is taking steps in the right direction to implement the reverse merger which is expected to be completed by Q3FY23E. Equity dilution with an approved QIP of Rs 1,000 Cr is expected to weigh on the bank’s ROE in the short term. On completion of 5 years as an SFB, EQSFB will be eligible to apply for a universal banking license, which if issued would further support our re-rating rationale. It recommends a BUY rating on the stock with a target price of Rs 78 (2.1x Sept’23E ABV), implying an upside potential of 29% from CMP.
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