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For the quarter and nine months ended December 31, 2024, Equitas Small Finance Bank reported key financials:
Total revenue increased to ₹5353.80 crore, reflecting a healthy growth driven primarily by higher interest income from advances, linked to increased demand for retail banking products. This represents an approximate year-on-year growth in revenue of 16.10%.
Net profit for the quarter stood at ₹66.30 crore, significantly down from ₹202.00 crore in the corresponding quarter of the previous year, leading to a diluted EPS of ₹0.58 compared to ₹1.79 last year. The decline in profitability can be attributed to increased provisions for bad debts amounting to ₹243.11 crore, which was necessary given the heightened uncertainty in the lending environment.
Operational costs rose by 15% year-over-year, primarily due to escalated employee cost and maintenance of branch infrastructure as the bank continues to expand its presence. The rise in operating expenses may reflect efforts to improve service quality and operational efficiency.
On the balance sheet side, the capital adequacy ratio remained robust at 20.29%, providing a strong buffer against potential credit risks. Total assets increased to ₹5082.28 crore, evidencing strategic growth, while the bank maintains a manageable debt-equity ratio of 0.26, indicating solid leverage management.
Looking ahead, the bank's strategic focus appears to remain on improving asset quality and managing operational efficiency while pursuing growth avenues in retail and microfinance sectors. Market sentiment suggests cautious optimism amidst the ongoing economic recovery.
Given these dynamics, it positions the stock as a potential hold, with opportunities contingent on effective cost management and successful execution of growth strategies in the coming quarters.