“Buy Equitas Small Finance Bank, Target Price of Rs 105: motilal oswal”

Motilal Oswal, a brokerage firm, has recommended a buy rating on Equitas Small Finance Bank shares. In its research report dated June 23, 2023, the firm is bullish on the stock, setting a target price of Rs 105. Motilal Oswal expects the bank’s asset quality to improve, making it a favorable investment option.

Equitas small finance bank
Equitas small finance bank

Stocks to Buy: Motilal Oswal, a brokerage firm, recommends investing in Equitas Small Finance Bank, a mid-cap share in the banking sector. This stock has doubled investors’ wealth in the past year. With a strong growth outlook, this share is poised to generate impressive profits for investors. The stock is continuously being re-rated due to its robust growth. The brokerage firm expects further improvement in the bank’s asset quality. On June 26, 2023, Equitas Small Finance Bank’s share closed at ₹85, rising by 3.6%.

Share Expected to Touch ₹105 Level

Motilal Oswal suggests buying shares of Equitas Small Finance Bank (EQUITASB) and sets a target price of ₹105 per share. Based on the current price, investors could potentially earn a remarkable return of around 23-24%. This small finance bank has delivered exceptional returns over the past year. Within one year (until June 26), the share price has surged by over 115%. This means that a ₹100,000 investment in this share in June 2022 is now worth more than ₹200,000. The company’s market capitalization on BSE stands at ₹9,462.47 crores.

Brokerage’s Opinion

Motilal Oswal believes that Equitas Small Finance Bank’s asset quality will improve. The estimated return on assets (RoA) is expected to exceed 2%. The bank recorded substantial profits in FY23, supported by strong margins, healthy loan growth, and controlled credit costs.

The brokerage suggests that the bank’s focus is on a diversified loan book. It expects good growth from small business loans, as well as auto loans, microfinance, and housing finance segments. This could result in a 27% CAGR in loans during FY23-25. The bank’s franchise model is experiencing robust growth. The GNPA/NNPA ratio improved to 2.8%/1.2% by 4QFY23. By FY25, the Provision Coverage Ratio (PCR) could increase to 70%. It is estimated that the bank could achieve a RoA/RoE of 2.1%/16.7% during FY25.

(Disclaimer: The information and investment recommendation provided on this website are sourced from the brokerage house and are not personal opinions. However, it is important to note that we are not a registered financial advisor with the Securities and Exchange Board of India (SEBI). The purpose of this website is solely to provide financial literacy to individuals and not to offer any form of investment advice. Before making any investment decisions or committing your funds, it is crucial to seek the guidance of a qualified financial advisor.)

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