Equitas SFB shares hit 52-week high as SBI Funds Management gets RBI nod to buy 9.99% stake

Equitas Small Finance Bank hit 52-week high in Wednesday’s trade after the Reserve Bank of India (RBI) approved the acquisition of 9.99 per cent stake in the lender by SBI Funds Management. The approval has been given to SBIFML to acquire the stake through schemes of SBI Mutual Funds (SBIMF). The approval by the RBI, however, is subject to compliance with the relevant provisions of relevant acts, the filing added.

Following the announcement, shares of Equitas Small Finance Bank jumped 7 per cent to hit  52-week high of Rs 63.90.The scrip had settled at Rs 59.5 on Tuesday.

Incorporated in 1993, Chennai based Equitas Small Finance Bank is among the largest small finance banks in India which has a diversified loan portfolio and less dependence on microfinance business.

Equitas Small Finance Bank has delivered a return of more than 30 per cent in the last one quarter while  the counter has risen 60 per cent in the last six months.

After meeting the company management, Kotak Institutional Equities (KIE) has maintained its ‘add’ rating on the Equity Small Finance Bank, but has revised its target price to Rs 65 from Rs 60 earlier.

The management reiterated that the asset quality is improving and that is driving confidence to grow faster, while liabilities continue to be an area of work, said the brokerage.

KIE continues to build a steady recovery in return ratios driven primarily by lower credit cost in the medium term. With asset quality pain largely behind, the discussion is now moving towards operating profit performance.

“We take comfort from the stabilization in leadership at the bank and the progress on the reverse-merger. We see an opportunity for stock performance led by the merger,” KIE added.

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