4 July 2020
Company Update | Sector: Financials
Equitas Holdings
BSE SENSEX
S&P CNX
36,021
10,067
CMP: INR54
TP: INR65 (+21%)
Buy
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Moratorium book receding but still elevated
Disbursements recovering; Focus on existing customer base
To share a business update on trends related to disbursements, deposits
accretion and moratorium proportion availed across segments, EQUITAS
hosted an analyst call. Following are the key takeaways:
Moratorium book receding but elevated
EQUITAS has provided the
‘Opt-out’
facility to all customers under moratorium
1.0 due to the strict lockdown, which impacted customers severely. However,
the
‘Opt-in’
facility has been provided under moratorium 2.0 as lockdown
restrictions eased and economic activity picked up. In the MFI business, ~56%
centers opted for moratorium as at Jun’20. Further, the percentage of loan
portfolio availed moratorium in other segments: ~42% in Small business loans,
~69% in Vehicle loans and ~96% in Small corporate portfolio while all NBFC
customers paid Jun’20 EMIs.
Bloomberg
Equity Shares (m)
M.Cap.(INRb)/(USDb)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
12M Avg Val (INR M)
Free float (%)
EQUITAS IN
342
18.3 / 0.3
131 / 33
4/-36/-46
603
100.0
Disbursements improving; focus remains on existing customer base
EQUITAS made almost nil disbursements during Apr’20 and disbursed ~INR0.9b
during May’20. However, disbursement trends started improving from Jun’20
with disbursing ~INR4.6b during the month. The bank remains focused on
helping its existing customer base to normalize their business. Nearly ~90% of
incremental disbursements in the MFI business are to existing borrowers. It is
also witnessing strong traction for gold loans with the product available in 100+
banking outlets currently.
Financials & Valuations (INR b)
Y/E March
FY20 FY21E
NII
15.0
16.0
OP
6.0
6.2
NP
2.4
1.6
NIM (%)
8.8
8.2
EPS (INR)
7.1
4.7
BV/Sh. (INR)
80.3
83.9
ABV/Sh. (INR)
75.6
75.6
Ratios
RoE (%)
9.7
5.8
RoA (%)
1.4
0.8
Valuations
P/E(X)
7.5
11.3
P/BV (X)
0.7
0.6
P/ABV (X)
0.7
0.7
FY22E
17.8
6.9
2.6
8.0
7.6
89.1
78.5
8.8
1.1
7.0
0.6
0.7
MFI: Center meeting rate improves to 95%; offering small top-ups up to
INR10k
EQUITAS started conducting center meetings after 3
rd
Jun’20 and managed to
improve the meeting run-rate to ~95%. Currently, ~44% centers have collected
payment dues for Jun’20 while 56% centers opted for moratorium in the month.
Further, based on customer feedback, the bank expects collection trends to
improve in the coming months. EQUITAS is also providing top-up loans up to
INR10k to existing customers to help re-start their operations.
Shareholding pattern (%)
As On
Mar-20 Dec-19 Mar-19
Promoter
0.0
0.0
0.0
DII
34.5
37.2
42.0
FII
28.7
26.1
18.6
Others
36.9
36.7
39.4
FII Includes depository receipts
Deposit growth at 11% QoQ led by term deposits
Deposits grew 11% QoQ and stood at INR114.7b, mainly led by term deposits,
which grew 13% QoQ. CASA deposits grew 7% QoQ and stood at INR23.5b.
Thus, CASA ratio stands at 20.5%. Nearly ~57k accounts were acquired through
digital products (Selfie SA and Selfie FD) during 1QFY21. It has recently
introduced ‘Video KYC’ to help on-boarding of new customers.
Research Analyst: Nitin Aggarwal
(Nitin.Aggarwal@MotilalOswal.com) |
Himanshu Taluja
(Himanshu.Taluja@motilaloswal.com)
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com);
Yash Agarwal
(Yash.Agarwal@motilaloswal.com)
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.