Key Events This Week
Jan 29: Q3 FY26 results highlight asset quality improvement and normalised provisions
Jan 30: Reports record quarterly earnings with strong turnaround
Week Close: Rs.70.01 (-1.42%) vs Sensex +1.62%
Jan 27: Stock Opens Week Lower Amid Sensex Gains
Trading resumed on 27 January with Equitas Small Finance Bank’s stock closing at Rs.69.67, down 1.90% (Rs.1.35) from the previous close of Rs.71.02. This decline occurred despite the Sensex rising 0.50% to 35,786.84, indicating early profit-taking or cautious positioning by investors ahead of the bank’s quarterly results. The volume was robust at 490,745 shares, suggesting active trading interest.
Jan 28: Marginal Decline Continues as Sensex Surges
The stock price edged down slightly by 0.13% to Rs.69.58 on 28 January, with a notably lower volume of 97,162 shares. Meanwhile, the Sensex surged 1.12% to 36,188.16, extending its weekly gains. The stock’s relative weakness amid broad market strength suggested investors awaited the upcoming quarterly earnings announcement for clearer direction.
Jan 29: Asset Quality Improvement Shines in Q3 Results
On 29 January, Equitas Small Finance Bank released its Q3 FY26 results, revealing a significant improvement in asset quality and normalisation of provisions following a shock in Q2. The stock closed marginally higher at Rs.69.61 (+0.04%), with volume rising to 352,928 shares, reflecting cautious optimism.
The bank reported gross non-performing assets (NPA) reduced to 2.75%, with net NPA at 0.92%, among the lowest in recent years. This improvement contributed to margin expansion and operational efficiency. The results indicated a stabilising credit environment and effective risk management, which partially offset the subdued price movement.
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Jan 30: Record Earnings Mark Strong Quarterly Turnaround
The bank reported a robust quarterly turnaround on 30 January, posting record net interest income (NII) of ₹851.63 crore and profit after tax (PAT) of ₹90.03 crore, the highest in its recent history. Earnings per share (EPS) rose to ₹0.79, signalling improved profitability and operational efficiency.
Despite this strong core performance, the stock closed slightly down at Rs.70.01 (+0.57% intraday but -0.19% from previous close), with volume at 192,018 shares. The muted price reaction may reflect investor caution due to the unusually high non-operating income, which accounted for 254.51% of profit before tax, raising questions about sustainability.
The bank’s financial trend score improved dramatically from -6 to +13 over the last three months, reflecting positive momentum. However, the stock’s weekly decline of 1.42% contrasted with the Sensex’s 1.62% gain, indicating relative underperformance despite fundamental improvements.
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| Date | Stock Price | Day Change | Sensex | Day Change |
|---|---|---|---|---|
| 2026-01-27 | Rs.69.67 | -1.90% | 35,786.84 | +0.50% |
| 2026-01-28 | Rs.69.58 | -0.13% | 36,188.16 | +1.12% |
| 2026-01-29 | Rs.69.61 | +0.04% | 36,266.59 | +0.22% |
| 2026-01-30 | Rs.70.01 | +0.57% | 36,185.03 | -0.22% |
Key Takeaways
Equitas Small Finance Bank’s week was characterised by a strong fundamental turnaround, highlighted by record quarterly earnings and improved asset quality. The reduction in gross and net NPAs to 2.75% and 0.92% respectively, alongside a surge in net interest income to ₹851.63 crore, underscores the bank’s operational resilience and effective risk management.
However, the stock’s 1.42% weekly decline against a 1.62% Sensex gain signals investor caution, likely due to the elevated non-operating income component, which accounted for over 250% of profit before tax. This raises concerns about the sustainability of recent profitability gains.
The bank’s upgraded Mojo Score of 71.0 and Buy grade reflect improved market sentiment and confidence in its growth trajectory. Yet, the muted price response suggests that investors are awaiting confirmation of sustained core earnings growth and margin stability.
Conclusion
Equitas Small Finance Bank Ltd demonstrated a commendable financial turnaround in Q3 FY26, with record earnings and enhanced asset quality providing a solid foundation for future growth. Despite these positives, the stock underperformed the broader market this week, reflecting investor prudence amid questions over the non-operating income’s impact on profitability.
Going forward, the bank’s ability to maintain core income growth and manage asset quality will be critical to translating fundamental improvements into sustained stock performance. The current valuation and upgraded rating position the bank favourably within the small finance banking sector, though cautious monitoring of earnings quality remains advisable.
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