ICICI Securities Maintains Buy Recommendation on Equitas Small Finance Bank with Price Target of Rs 90

Equitas Small Finance Bank Delivers Robust Q4FY26 Financial Performance

Equitas Small Finance Bank (Equitas SFB) has reported a strong fourth quarter (Q4) financial performance for the fiscal year 2026. The bank's Return on Assets (RoA) stood at 1.5%, its highest in multiple quarters, surpassing the company's guidance of 1%. This achievement marks the fourth consecutive quarter of sustained earnings momentum.

In the same quarter, the bank's Profit After Tax (PAT) more than doubled sequentially to INR 2.1 billion. This growth in earnings is a result of broad-based recovery, with all three key performance indicators showing improvement. Net Interest Income (NII) grew by 15% on a quarterly basis, while the cost-income ratio decreased by approximately 500 basis points on a quarterly basis. The bank's credit cost also moderated to 1%, the lowest in the past eight quarters.

Outlook and Recommendations

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While management has cautioned that the lower credit cost in Q4FY26 may be due to favourable seasonality and may normalize upwards, the bank is expected to maintain a Return on Assets (RoA) of more than 1% going forward. Based on this outlook, ICICI Securities maintains a BUY rating on Equitas Small Finance Bank with an unchanged Target Price (TP) of INR 90. This recommendation is based on a price-to-book value (P/BV) multiple of 1.5x on the bank's estimated Book Value Per Share (BVPS) for March 2027.