Check Before You Invest : Equitas Small Finance Bank Ltd

BSE: 543243 NSE: EQUITASBNK ISIN: INE063P01018

| Sector: BFSI | Industry: Bank - Private

Snapshot

Q.1 Which industry/sub-sector does Equitas Small Finance Bank Ltd belong to?

Equitas Small Finance Bank Ltd belongs to the BFSI sector, operating specifically within the Bank - Private segment.

Q.2 Is Equitas Small Finance Bank Ltd a good quality company?

Equitas Small Finance Bank Ltd is a average quality company, based on a somewhat consistent 10-year financial track record.

Q.3 Is Equitas Small Finance Bank Ltd undervalued or overvalued?

Equitas Small Finance Bank Ltd appears Undervalued, as its key valuation ratios are below with their past averages.

Q.4 Is Equitas Small Finance Bank Ltd a good buy now?

Equitas Small Finance Bank Ltd is a good buy now, based on strong price trend analysis suggesting prices may rise. However, you need to check its quality and valuation before making a decision

Performance Analysis

Q.1 Total Income growth of Equitas Small Finance Bank Ltd?

Equitas Small Finance Bank Ltd Total Income growth is 14.93% for FY-2025, which is below its 5-year CAGR of 19.79%, indicating slower growth.

Q.2 Return on Assets of Equitas Small Finance Bank Ltd?

Equitas Small Finance Bank Ltd Return on Asset is 0.3%, which is below its 5-year historical median of 1.8%, indicating deteriorated earnings on assets.

	Current Level	5-year Historic Median
NIM%	6.37	7.51
PPOP%	0.3	17.08
RoA%	0.3	1.8

Q.3 Return on Equity (ROE) of Equitas Small Finance Bank Ltd?

Equitas Small Finance Bank Ltd Return on Equity is 2.5% for FY-2025, which is below its 5-year historical median of 12.2%, indicating the business is making worse use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of Equitas Small Finance Bank Ltd?

Equitas Small Finance Bank Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 0.3% for FY-2025, which is below its 5-year median(17.08%), indicating decreasing margins.

Q.5 Net Interest Margin of Equitas Small Finance Bank Ltd?

Equitas Small Finance Bank Ltd Net Interest Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 6.37% for FY-2025, which is below its 5-year median( 7.51%), indicating decreasing margins.

Q.6 Total Asset growth of Equitas Small Finance Bank Ltd?

Equitas Small Finance Bank Ltd Total Asset growth is 16.63% for FY-2025, which is below its 5-year CAGR of 22.32%, indicating slower growth.

Q.7 Cost to Income ratio of Equitas Small Finance Bank Ltd?

Equitas Small Finance Bank Ltd Cost to Income ratio which represents the cost incurred for every Rs.100 earned is 68% for FY-2025, is higher its historical 5-year median of 64.5%, indicating improved cost management.

Q.8 Capital Adequacy ratio of Equitas Small Finance Bank Ltd?

Equitas Small Finance Bank Ltd Capital Adequacy ratio (CAR) is 20.60% for FY-2025, which is above the regulatory requirement of 12%, indicating strong capital position.

Q.9 Asset Quality of Equitas Small Finance Bank Ltd?

Equitas Small Finance Bank Ltd Gross Non-Performing Assets, which are loans overdue by more than 90 days, is 2.89% for FY-2025, which is in line with its 5-year median 2.89%, while Net Non-Performing Assets, which is GNPA minus provisions made for bad loans is 0.98% which is below its 5-year median( 1.21%), indicating improving asset quality.

Ownership & governance

Q.1 Promoter shareholding and pledge status of Equitas Small Finance Bank Ltd?

Promoters hold 0.00% of the Equitas Small Finance Bank Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

Q.1 AUM Growth of Equitas Small Finance Bank Ltd vs Industry Peers?

Equitas Small Finance Bank Ltd AUM CAGR is 22.32%, compared to the 5-year industry median CAGR of 12.74%, indicating faster growth and gaining its market share.

Q.2 Profit metrics (NIM, PPOP, RoA) of Equitas Small Finance Bank Ltd vs industry peers

Equitas Small Finance Bank Ltd profit metrics are in line with the industry median level of 7.71%, indicating similar profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NIM%	6.37	3.71
PPOP%	0.3	18.38
RoA%	0.3	1.05

Q.3 Operating efficiency of Equitas Small Finance Bank Ltd vs industry peers?

Equitas Small Finance Bank Ltd Cost to Income (66.3) is above the industry median of (61.45); while the current ROE (12.2) are below than the 5-year average Industry ROE (12.3). This shows that the business is positioned in the middle quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NIM%	6.37	3.71
PPOP%	0.3	18.38
RoA%	0.3	1.05
Cost to Income%	68	61.45
ROE%	2.5	12.3

Valuation & price assessment

Q.1 Stock return of Equitas Small Finance Bank Ltd over the last decade?

Over the last 5 years, the stock has delivered a CAGR of 3.88% based on the current price.

Q.2 What return has the stock given over the last decade?

	9Y	5Y	3Y	1Y
Share Price CAGR	-	3.9%	-1.9%	4.6%

Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	74	16.86	13.38
Price to Book	1.25	1.61	1.37
Price to Sales	1.12	1.90	1.77
EV to EBITDA	3.8	8.88	7.70

Q.4 Valuation ratios of Equitas Small Finance Bank Ltdvs historical and industry averages?

The current Price to book ratio (P/B) 1.25% is lower than its historical median of 1.61%, indicating that at the current price the stock is undervalued. However, you need a deeper analysis to make a better judgement.

Strategic outlook

Q.1 Does its ROIC exceed its WACC?

Equitas Small Finance Bank Ltd return on invested capital (ROIC) is 28.68% for FY-2025, is higher than its estimated weighted average cost of capital (WACC) of 13.5%, indicating value creation.

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