Mehabe score: 3 G Factor: 3 Piotski Score: 6 The stock has a rating SELL. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 6.
Description
Equitas Small Finance Bank Ltd before acquiring small bank license, operated as a wholly-owned subsidiary of Equitas Holding Ltd. The holding entity started its operations in 2007 in the microfinance segment & diversified into vehicle & housing finance in 2011. Also entered into SME & LAP in 2013. It merged with the other two subsidiaries named Equitas Microfinance Ltd & Equitas Housing Finance Ltd & formed a bank. After receiving a license in Sept 2016 the company commenced operations under Equitas small finance Bank. Site:EQUITASBNK Main Symbol:EQUITASBNK
Stock trades at 55.0, below its 50dma 59.22 and below its 200dma 58.2. The stock remains bearish on technicals
The 52 week high is at 76.80 and the 52week low is at 38.10
Price Chart
P/E Chart
Sales and Margin
Strengths
– has delivered good profit growth of 35.18% CAGR over last 5 years
Weakness
– Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
– has a low return on equity of 10.87% for last 3 years.
-Earnings include an other income of Rs.565.59 Cr.
Competition
– The industry trades at a mean P/E of 16.4x. Kotak Mah. Bank trades at the industry’s max P/E of 34.91x. EQUITASBNK trades at a P/E of 23.0x
– Industry’s mean G-Factor is 3.9 while the mean Piotski score is 6.0. EQUITASBNK has a G-Factor of 3 and Piotski scoreof 6.
– Average 1 month return for industry is 6.6%. The max 1- month return was given by Bandhan Bank: a return of 26.73 %
Quarterly Results
Sales for period ended Dec 2021 is Rs 901.0 cr compared to Rs 857.0 cr for period ended Dec 2020, a rise of 5.1% .
vis-vis 489.0 for period ended Dec 2020 .
Operating Margins expanded 165.3 bps for period ended Dec 2021 vis-vis Dec 2020.
Company reported operating profit of Rs 529.0 cr for period ended Dec 2021 and operating profit margin at 58.7 % for same period.
The EPS for quarter ended Dec 2021 is Rs 0.94 compared to Rs 0.36 for previous quarter ended Sep 2021 and Rs 0.0 for Dec 2020.
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 3382.0 cr for period ended TTM vis-vis sales of Rs 3194.0 cr for the period ended Mar 2021, a growth of 5.6%. The 3 year sales cagr stood at 17.0%.
Operating margins shrank to -195.0% for period ended TTM vis-vis 210.0% for period ended Mar 2021, contraction of 40500.0 bps.
Net Profit reported at Rs 274.0 cr for period ended TTM vis-vis sales of Rs 384.0 cr for the period ended Mar 2021, falling 40.1%.
Company recorded a Net Profit CAGR of 9.1% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 2044.0 cr for period ended Mar 2021 vis-vis Rs 440.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has had stable/constant Return on Equity (RoE) metric. The RoE on Last Year basis was 13.0% compared to 11.0% over the last 3 Years. – The stock has given a return of 38% on a 1 Year basis vis-vis a return of % over the last 3 Years. – The compounded sales growth on a TTM bassis is 9% vis-vis a compounded sales growth of 27% over the last 3 Years. – The compounded profit growth on a TTM basis is -13% vis-vis a compounded profit growth of 129% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Dec 2021 fii holding stood at 0.74% vis-vis 0.8% for Sep 2021 – Public shareholding has remained largely constant. The Dec 2021 public holding stood at 5.12% vis-vis 4.81% for Sep 2021
Conclusion
– has delivered good profit growth of 35.18% CAGR over last 5 years – Though the company is reporting repeated profits, it is not paying out dividend
– has low interest coverage ratio.
– has a low return on equity of 10.87% for last 3 years.
-Earnings include an other income of Rs.565.59 Cr.
Fundamentally, the stock remains weak. The business fundamentals are on shaky ground. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock reflects the poor fundamentals. The stock remains below its 50 DMA 59.22 and is trading at 55.0. It has shown near term lack of bullish momentum. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
