Absolutely. No issue with financials, that can be vouched. You should also study the investor presentation and understand the loan book. It is 81% secured and only 19% microfinance. Even during covid, Equitas has not posted any quarter in red since the book is secured and diversified in SME finance, Vehicle loans, Microfinance.
In Q1 FY 24, NIM pressure was there due to high FD Rates and Loans being fixed for avg tenor of 2 years. Still NIM is quite strong at 8.75% which Mgmt has told can go down to 8.50% in FY 24 which shall again start going up when Interest rates start declining. AU SFB has NIM of 5.5% with quite similar loan book. Equitas is a long term stock so temporary blips are always possible. It cannot be compared with any microfinance lender. I feel one should focus on the strengths of the bank such as Strong leader, Stable management, Very strong growth in deposits, 25% plus loan growth, Low PE on forward basis, Strong CASA & Retail deposit franchise, Huge potential in small business secured loans in informal economy, good fee income and plans for universal bank.
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