Equitas Small Finance Bank Ltd Company Analysis

Equitas Small Finance Bank is a retail-focused small finance bank with a diversified lending franchise spanning small-business loans, microfinance, housing finance, used commercial and passenger vehicles, gold loans and other retail banking products. The bank has been steadily reducing its dependence on the MFI segment by expanding its non-MFI portfolio, while simultaneously growing deposits and its CASA base. FY26 marked a significant recovery, with the bank reporting ₹103 crore PAT for the full year and Q4 PAT of ₹213 crore, up 406% YoY. Gross advances grew 22% YoY, while deposits increased 8%; Q4 NIM improved to 7.29% and cost of funds declined to 6.94%. The improvement continued in Q1 FY27, when gross advances increased 27% YoY and disbursements surged 93% to ₹6,784 crore. PAT reached ₹184 crore compared with a ₹224 crore loss in Q1 FY26, while ROA and ROE were 1.18% and 11.76%, respectively. The bank maintained a healthy CRAR of 19.44% and LCR of 178.46%. The key growth drivers are continued expansion of small-business lending, housing finance, vehicle loans and gold loans, alongside deposit mobilisation and improving asset quality. Groww currently shows 1-year TTM revenue growth of about 14% and a 3-year revenue CAGR of 18%, although the 3-year profit CAGR remains negative because of the sharp earnings weakness in the preceding period. The major risks remain credit costs, asset-quality deterioration, MFI exposure, operating costs and the ability to sustain recent profitability as the loan book expands. Overall, Equitas is showing a substantial earnings recovery and stronger loan growth, but the key factor to monitor is whether the FY26–Q1 FY27 improvement represents a sustainable shift in profitability rather than simply a recovery from a weak base.