Equitas Small Finance Bank's Q2 FY25 Financial Results Show Mixed Performance

Equitas Small Finance Bank, a midcap private bank, recently announced its financial results for the quarter ending September 2024. According to MarketsMOJO, a leading financial analysis platform, the stock call for Equitas Small Finance Bank is ‘Sell’.

The bank’s financial performance for the quarter has been very negative, with a score of -23 compared to -9 in the previous quarter. However, there are some positive aspects to the bank’s performance based on the September 2024 financials.

The bank’s net interest income for the quarter was the highest at Rs 802.31 crore and has been growing consistently for the past five quarters. This indicates that the bank’s core business is performing well. Additionally, the interest earned for the quarter was also the highest at Rs 1,554.87 crore and has been growing each quarter for the past five quarters, showing a positive sales trend.

On the other hand, there are some areas where the bank’s performance has not been satisfactory. The profit before tax less other income (PBT) for the quarter was at Rs -218.87 crore, which is a significant decrease of -8183.8% compared to the average PBT of the previous four quarters. This indicates a very negative trend in the near term. Similarly, the profit after tax (PAT) for the quarter was at Rs 12.88 crore, a decrease of -91.9% compared to the average PAT of the previous four quarters, showing a negative trend in the near term.

The bank’s gross NPA for the quarter was the highest at 2.95% and has been increasing each quarter for the past five quarters. This indicates that the proportion of stressed loans given by the bank is increasing. The operating profit margin for the quarter was the lowest at 7.13% and has been falling each quarter for the past five quarters, indicating a deterioration in the bank’s efficiency.

The credit deposit ratio for the half-yearly period was the lowest at 85.21% and has been falling for the past four periods. This indicates that the bank has been creating fewer revenue-generating assets by creating proportionately lower loans against its deposits. The operating profit for the quarter was also the lowest at Rs 110.79 crore in the past five quarters, showing a negative trend in the near term.

The non-operating income for the quarter was 1,191.08% of the profit before tax (PBT), indicating that the bank’s income from non-business activities is high, which may not be a sustainable business model. The earnings per share (EPS) for the quarter was the lowest at Rs 0.11, showing a decline in profitability and lower earnings for shareholders.

Overall, Equitas Small Finance Bank’s financial performance for the quarter ending September 2024 has been negative, with some positive aspects in terms of net interest income and interest earned. However, the bank’s profitability and efficiency have declined, and there are concerns regarding the proportion of stressed loans and non-operating income. Investors are advised to carefully consider these factors before making any investment decisions.