Equitas SFB shares: Why this stock is up 7% after analyst meet; target prices

Shares of Equitas Small Finance Bank Ltd (Equitas SFB) jumped 7 per cent in Friday's trade after the management, which hosted analyst meet, reiterated confidence in the long-term opportunity across MSME and affordable housing lending. Equitas SFB said execution, rather than product expansion, will be the key driver of future growth.

The SFB expects credit growth momentum to sustain at 20 per cent, with its asset mix largely tilted toward secured lending while maintaining MFI exposure at 10 per cent. Asset quality at Equitas SFB is seen under control as MFI stress is largely behind, but the bank stayed watchful of the West Asia conflict. 

Systematix, which suggested a 'Buy' and a target of Rs 80 on the stock said, the management provided comfort on leadership continuity, with MD & CEO PN Vasudevan indicating his intention to continue leading the bank. The RBI regulations permit another five years of tenure, and a three-year extension has already been approved. 

"The bank indicated that it is in no hurry to pursue a universal banking licence and is likely to reassess an application only after gaining greater regulatory comfort over the next 23 quarters," it noted.  

Emkay Global said the bank’s diversified loan portfolio, along with the gross NPA ratio being below 3 per cent, should make it eligible to apply for a Universal Bank License, thereby supporting the stock’s rerating. It maintained 'ADD' and target of Rs 75.

JM Financial said the reduction in MFI concentration, improving funding profile and better operating leverage enhance earnings visibility, and warrant an earnings upgrade and a higher valuation multiple. 

"That said, deposit mobilisation and execution on profitability targets are the key areas to monitor, it said while suggesting a new target of Rs 77 from Rs 65 earlier.

Following the development, Equitas SFB shares rose 6.65 per cent to hit a high of Rs 76.15. t the prevailing valuation of 1.1 times estimated FY28 earnings, Equitas SFB is attractively valued, MOFSL said. It suggested Buy with a target of Rs 85. Re-rating catalysts include a pickup in business growth, stabilizing NIMs, and a ontinued improvement in asset quality trends, the brokerage said.