Target: ₹111

CMP: ₹99.16

Equitas Small Finance Bank has deliberately de-focused on lower-yielding segments such as New CV and NBFCs as it looks to improve the mix of higher-yielding segments in the portfolio in its bid to protect NIMs. The focus will remain on growing the Used CV and Used Cars portfolio. The bank will look at maintaining a share of secured loans at about 80 per cent of the overall portfolio vs around 82 per cent currently.

EQSFB is also planning to enter the credit cards and personal loan segment, with their launch slated for Apr-May’24. These products would be offered primarily through cross-selling to liability franchise customers and SBL customers.

Expectations of NIMs gradually stabilising, improving fee income profile (with AD-1 license aiding fee income prospects), and steady credit costs should support earnings growth, as we expect earnings growth of around 24 per cent CAGR over FY24-26).

With the new strategy on deposit mobilisation coming into action and demand- led credit growth, EQSFB will look to bring down the C/D Ratio to 85 per cent vs 86 per cent in FY24. Focus on the asset side remains on improving the share of higher-yielding products, and driving growth in the newer products while on the liability side, the focus is on building a granular liability franchise.