Multibagger Midcap Banking Stock Under Rs 100 To Buy For 28% Potential Upside, Says Motilal Oswal

Motilal Oswal has placed a Buy on Equitas Small Finance Bank (EQUITASB) with a positive outlook, assigns Rs 105 target price. The stock is showing 28% upside potential, considering the given target price.

According to the brokerage, "EQUITASB reported strong profitability in FY23, with RoA expanding to 1.9% (avg. of 2.2% in 2HFY23). It was driven by steady margins, healthy loan growth and controlled credit costs."

Equitas Small Finance Bank Ltd is one of the leading Small Finance Banks (SFBs) in the country. It is a midcap bank with a market capitalisation of Rs. 9,112.13 crore.

Valuation and view: Maintain BUY with revised PT of INR105

According to Motilal Oswal, "EQUITASB has been reporting a gradual improvement in its operating performance over the past few quarters. Steady AUM growth has been led by healthy traction across segments, while the moderation in credit costs has boosted earnings. As a result, the bank reported RoA/RoE of ~1.9%/~12% in FY23. The bank has achieved a consistent RoA and aims to sustain it at >2%. Deposit growth too remains healthy, with the CASA mix of ~42%. Asset quality is strong with the restructured book declining to 1% of loans from 7% last year and PCR improving 1,400bp in FY23 to 57%."

It added, "Although the RBI approval for a fresh three-year term for Mr. Vasudevan is awaited, the overhang of management succession has gone, and the focus will now shift back to the fundamental performance of the bank. We estimate EQUITASB to deliver FY25E RoA/RoE of 2.1%/16.7% and value it at INR105 (1.7x Mar'25E BV)."

Stock Outlook

On Friday, the shares of EQUITASB falls 3.17%, ended at Rs. 82.07. The shares declined 4.92% in the past 1 week. In the past 3 months, it jumped 26.73% and in the past 6 months, it jumped 59.98%. The share gave a multibagger return of 114% in the past 1 year.

It recorded the 52 week low on 23 June 2022 at Rs 37.75 apiece and 52 week high on 21 June 2022 at Rs 90.58 apiece, respectively.

Disclaimer

The above-mentioned stock has been picked from the brokerage report of Motilal Oswal Financial Services. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.