Equitas Small Finance Bank hits fresh 52-week high; stock up 38% in a month

On February 8, the board approved allotment of 789.5 million equity shares (swap ratio at 231:100) of Equitas SFB to the eligible shareholders of the erstwhile Equitas Holdings.

Shares of Equitas Small Finance Bank (SFB) gained nearly 3 per cent to hit a fresh 52-week high of Rs 73.48 in Wednesday’s intra-day trade. In the past one month, the stock of small finance bank zoomed 38 per cent, as against 0.55 per cent decline in the S&P BSE Sensex. It quoted close to its record high level of Rs 77, which it had touched on July 12, 2021.

As a new-age bank, Equitas SFB offers a bouquet of products and services tailored to meet the needs of individuals with limited access to formal financing channels, as well as affluent and mass-affluent, Small & Medium Enterprises (SMEs), and corporates.

Equitas SFB announced revised interest rates for Fixed Deposits as well as Recurring Deposits in Domestic, and NRE/ NRO Interest Rates Accounts. The hike in interest rates will be effective from March 1, 2023.

"The hike will allow FD customers to earn 8.2 per cent interest on investing less than Rs 2 crore for a tenure of 888 days. The interest payouts will continue to be quarterly across all account types," the bank said.

Meanwhile, the Equitas SFB’s reverse merger with Equitas Holdings is nearing completion. On February 8, the board approved allotment of 789.5 million equity shares (swap ratio at 231:100) of Equitas SFB to eligible shareholders of erstwhile Equitas Holdings.

Further, the Founder cum MD & CEO P N Vasudevan decided to stay back with the bank and the Board has decided to renew his term for 3 years, from Jul-2023 (subject to RBI approval).

In the October-December quarter (Q3FY23), Equitas SFB reported a beat on profit after tax (PAT) at Rs 170 crore, mainly on account of lower provisions, partly offset by flattish margins, and higher staff expenses as the bank adds headcount to bolster business growth.

Headline NPA ratio, meanwhile, moderated to 6.3 per cent, while the bank used Rs 40 crore from the contingent buffer (now at Rs 60 crore/03 per cent of loans), analysts said.

"The bank has posted strong credit growth at 27 per cent YoY/7 per cent QoQ, largely driven by healthy traction in micro finance, vehicle finance, small business loan and the corporate portfolio. The bank remains confident of delivering growth of around 25 per cent, as demand outlook remains good. It is expanding into newer geographies for growth and has accelerated hiring; although this, should keep staff cost elevated in the near term, but will improve business growth/return ratios in the long run," said analysts at Emkay Global Financial Services.