Equitas Holdings up 33% in 2 days on heavy volumes; stock nears 2-year high

Trading volumes on the counter jumped over 6-fold with a combined 18.99 million shares having changed hands on the NSE and BSE till 10:35 am

Shares of Equitas Holdings touched a fresh 52-week high of Rs 124.7 after they rallied 12 per cent on the BSE in the intra-day trade on Thursday. The stock has surged 33 per cent in two days after Equitas Small Finance Bank (SFB) released its business update for June quarter (Q1FY22) on Wednesday. Equitas Holdings held 81.98 per cent stake in Equitas SFB as on March 31, 2021.

At 10:35 am, Equitas Holdings was up 6 per cent at Rs 118.45 as compared to a 0.25 per cent decline in the S&P BSE Sensex. Trading volumes on the counter jumped over 6-fold with a combined 18.99 million shares having changed hands on the NSE and BSE till the time of writing of this report. The stock was trading close to its 2-year high and its highest level since July 18, 2019.

For Q1FY22, Equitas SFB reported 14.6 per cent year-on-year (YoY) growth (broadly flat quarter on quarter (QoQ)) in gross advances to Rs 17,800 crore. The muted trends were primarily attributable to lockdowns in core states/territories, which resulted in subdued disbursements of Rs 1,270 crore (nearly 50 per cent QoQ decline). However, on a YoY basis, it reported a 125 per cent increase.

On the asset quality front, collection efficiency trends declined sharply to 77.8 per cent in May’21, relative to 108.5 per cent in Mar’21 and 105.2 per cent in Apr’21. However, they showed some recovery to 83.5 per cent in June’21.

"Equitas SFB reported muted loan growth, impacted by subdued disbursements, on account of regional lockdowns. However, deposit growth remains robust, led by healthy traction in CASA deposits, with the CASA ratio surging to 40 per cent. On the asset quality front, collection efficiency declined sharply in May’21 across segments, but showed recovery in vehicle / small business loan segments in Jun’21. However, collection efficiency in the micro finance institution (MFI) portfolio declined sharply. Overall, collection trends would be a key monitorable in the near term," Motilal Oswal Financial Services said in a company update. The brokerage firm has a "Neutral" rating on Equitas Holding with a target price of Rs 110.

Meanwhile, the stock of Equitas SFB was trading 1 per cent lower at Rs 66.80, after hitting a low of Rs 64.35 on the BSE in intra-day trade. On Wednesday, the stock hit a 52-week high of Rs 70.30 before ending 15 per cent higher at Rs 67.65.