Equitas Holdings is focusing a big time on increasing penetration into existing geographies. The company’s MSME low base and customer acquisitions via the business correspondent model should drive growth in future. It has UCV low base and expanding footprint and now three states account for 60 per cent of loans. Equitas Holdings is planning to add gold loans and agriculture loans post the conversion into small finance bank.

Equitas Holdings started small finance banking operations from September 5, 2016. RBI has approved opening of 412 bank branches. Another 160 branches where Equitas Holdings currently carry out lending operations and which are not being converted into bank branch are pending with RBI for approval. Out of the total branches 104 branches will be located in rural, unbanked towns and villages.      

Equitas Holdings has received funds from its IPO of Rs 697 crore excluding net of expenses. The company will utilise capital infusion into EMFL, EFL and EHFL worth Rs 616 crore, Rs 288 crore, Rs 288 crore and Rs 40 crore respectively. It also given loan to EFL of Rs 81 crore. Equitas Holdings is strongly positioned to grow on the back of its balanced portfolio.

On financial front, Equitas Holdings’ total income increased by CAGR of 41.28 per cent from FY12-FY16. The company’s operating profit too rose by 53.83 per cent CAGR in during last five fiscal years. Its net profit posted Rs 167 crore in FY16 from net loss of Rs 2.69 crore in FY12.

On half yearly front, Equitas Holdings’ total income increased by 45.95 per cent to Rs 733 crore in H1FY17 on yearly basis. The company’s EBITDA too rose by 35.22 per cent to Rs 430 crore in H1FY7 as compared to same period in previous financial year. Its net profit also increased by 25.1 per cent to Rs 337 crore in H1FY17 on yearly basis.

Equitas Holdings’ ROA stood at 2.32 per cent and ROE stood at 8.67 per cent in Q2FY17. The company expanded its branch network to 596 in Q2FY17 from 572 in Q1FY17.

On asset quality front, Equitas Holdings gross NPA stood at 2.54 per cent and net NPA at 1.17 per cent in Q2FY17. The company posted NIM at 10.04 per cent to Rs 200 crore in Q2FY17. On asset under management point of view, Equitas Holdings managed 51 per cent for micro finance, 25 per cent for vehicle finance, 20 per cent for MSE finance and 4 per cent for housing finance during Q2FY17. Looking at the detail emerging from the company's operations and numbers and also considering the NBFC space at present in India, we suggest a BUY of this stock.