MOSL: EQUITAS HOLDINGS (Buy)-Business growth muted; collection efficiency shows a healthy recovery in Jul’21
EQUITAS HOLDINGS: Business growth muted; collection efficiency shows a healthy recovery in Jul’21
(EQUITAS IN, Mkt Cap USD0.6b, CMP INR129, TP INR160, 25% Upside, Buy)
- Equitas Small Finance Bank reported a PAT of INR119m (MOSLe: INR705m) impacted by higher opex and elevated provisions on account of restructuring. Business growth remains muted, with non-MFI AUM flat QoQ, while the MFI portfolio declined. Liability momentum continues to stay strong, with CASA ratio improving to 40%.
- On the asset quality front, slippages stood elevated as collections were impacted due to the second COVID wave. However, higher upgrades provided some support. GNPA/NNPA increased by 103bp/80bp QoQ, while the restructuring book stood elevated at INR13.3b (~7.5% of loans). Collection efficiency for Jun’21 stood at 83.5%, which improved further to mid-90s in Jul’21, providing comfort on recovery trends. We cut our FY22E/FY23E earnings estimates by 36%/14%. We maintain our BUY
Equitas Holdings Limited (EHL) is the holding company. The Company is engages in the businesses through its subsidiaries: Equitas Micro Finance Limited (EMFL), which is engaged in micro finance; Equitas Finance Limited (EFL), which provides used commercial vehicle (UCV) loans, micro and small and enterprise (MSE) finance, and others; Equitas Housing Finance Limited (EHFL), which is engaged in affordable housing loans and micro housing loans, and Equitas Technology Private Limited (ETPL), which offers technology platform for freight, logistics, carriers and related services. The Company's segments include Micro Finance, Other Finance and Others. The Micro Finance segment consists of micro financing. The Other Finance segment consists of housing finance and vehicle finance. The Company also provides loans to subsidiaries and corporate guarantees for the borrowings of subsidiaries from banks and institutions.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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