Buy Equitas Holdings Ltd For Target Rs.150 - Motilal Oswal
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Advances grew 5% QoQ; CASA led momentum in deposits
Commentary on collection efficiency positive
EQUITASB released its business update for 4QFY22.
Here are the key highlights:
* EQUITASB reported a 15.2% YoY and 4.9% QoQ growth in gross advances to INR206b. Growth was supported by a 15% QoQ improvement in disbursements to INR32.8b.
* On the liability front, total deposits grew 16% YoY and 6% QoQ to INR190b, led by robust CASA growth of 76% YoY and 8% QoQ. CASA ratio improved to 52% (v/s 50.8% in 3QFY22).
* Within CASA, current account grew faster than savings accounts. Current accounts jumped 46% QoQ to INR7.7b and Savings accounts saw a 6% QoQ rise to INR90.8b.
* Retail Term deposits were almost flat with a 1% sequential growth to INR71b. Bulk Term deposits rose 11% QoQ, but fell 59% YoY, to INR20b. Valuation and view: EQUITASB reported a healthy loan growth as its customer businesses are generating healthy cash flows, similar to preCOVID levels. Deposit growth was supported by healthy traction in CASA deposits. As a result, the cost of funds moderated marginally by 4bp to 6.43%. On the asset quality front, management expects better collection efficiency going forward as COVID-related disruptions are mostly done. We maintain our BUY rating with a TP of INR150/share (premised on 1.3x Sep’23E ABV).
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