Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us    
Google
Web www.equitybulls.com
Union Budget
Budget 2011-2012 Home
Industry Expectations - Budget 2011-2012
Industry Reactions - Budget 2011-2012
Budget 2010-2011
Budget 2010-2011 Home
Industry Expectations - Budget 2010-2011
Industry Reactions - Budget 2010-2011
Contributor's Corner
Bonanza Portfolio
Hemant K Gupta
Krish Bhatt
S A A R T H I
Trinity Investments
Exchange Information
BSE 2009 Holidays
NSE 2009 Holidays
Investor Guide
Depository & Dematerialisation
Grievance Redressal
Investor Guide
SEBI
Trading of Securities
Transfer of Securities
Your Rights
Budget 2009-2010
Budget 2009-2010 Home
Industry Expectations - Budget 2009-2010
Industry Reactions - Budget 2009-2010
Interim Budget 2009-2010 Home
Industry Expectations - Interim Budget 2009
Budget 2008-2009
Railway Budget 2008-2009
Industry Expectations - Budget 2008
Union Budget 2008-2009
Highlights of Budget 2008-2009
Summary of Budget 2008-2009
Industry Reactions - Budget 2008
IPOs
Current IPOs
Past IPOs
IPO Subscription
Mutual Funds
Gold Exchange Traded Fund
MF Unique Holding
Forthcoming Dividends
ELSS Schemes Comparison
Tax Plans
New Fund Offers
Research
Arbitrages
Equity
Market Whispers
Tax Planning
Home
Equity Linked Savings Scheme
Post Office MIS
9% GOI Senior Citizens Savings Scheme
8% Savings (Taxable) Bonds
Kisan Vikas Patra
National Savings Certificate
Public Provident Fund
IPO News

| More

Subscribe to Equitas Holdings Limited IPO - Angel Broking

Posted On: 2016-04-04 23:17:31

Equitas Holdings (Equitas) is a diversified financial services player with presence across microfinance, vehicle & MSE finance and housing finance. With a humble start in 2007, it has emerged as the fifth largest micro finance player in a short period of time. Equitas is amongst the ten players to have received a small finance bank license from the Reserve Bank of India (RBI). The company has a presence in 11 states through 539 branches, is backed by a strong Management team and with it being the second IPO in the micro finance segment, we expect strong subscription responses to the issue.

Expect a smooth transition towards being a Small Finance bank: The proposed small finance bank (SFB) will have access to low cost funds, ie below the current ~12% rate via deposits. However, there will be initial expenses to be incurred while transitioning to be a SFB as new processes will have to be implemented along with maintenance of CRR and SLR. Meeting 75% Priority Sector Lending (PSL) target will not be a challenge for Equitas as its entire portfolio qualifies for PSL and hence the migration from NBFC to SFB should be smooth. With leverage of only 4x, we believe there would be enough scalability without further dilutions.

Scalable business model with presence across growing verticals: Equitas' microfinance business has grown at a CAGR of 45% over FY2012-9MFY2016 to Rs. 2,935cr. There is a huge untapped opportunity in this segment as microfinance is targeted to the lower income segment which often lacks access to formal financing sources. With a loan portfolio of only ~Rs. 43,300cr for the industry and given the government's focus on financial inclusion together with better clarity on regulatory aspects, the microfinance industry is positioned for healthy growth going ahead. Within five years of operations Equitas' used vehicle & MSE financing business has scaled up to an AUM to Rs. 2,341cr, growing at a CAGR of 125% over FY12-15.

Reducing dependence on microfinance: Equitas has successfully diversified its business; the share of microfinance in terms of its total AUM has declined to 53% in 9MFY2016 from 100% in FY2011, while that of vehicle finance and MSE has risen to 42.5% from nil over the same period. Despite aggressive growth, it has been able to maintain strong asset quality with the GNPA at 0.2% for Microfinance and 2.6% for vehicle & MSE finance as of Dec-15. Its NIM of 11.1% and 12.5% respectively for the two aforementioned segments should help mitigate against any serious deterioration in asset quality, going forward.

Outlook Valuation: At the upper band of the offer price Rs. 110 the issue is priced at 1.8x its diluted BV of Rs. 60 (pre-dilution 2.3x). The company has decent ROE and ROA of 13% and 3.1%. Though post conversion to a SFB the return ratios might be compressed, while we expect the same to scale up subsequently. We believe the issue is attractively priced looking at the growth options the company offers in the long run. We recommend SUBSCRIBE to the issue.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com





Other Headlines:

Price band for Mahindra Logistics Limited's IPO fixed
Indian Energy Exchange to list on Oct 23, 2017
Mahindra Logistics Limited IPO to open for subscription on Oct 31, 2017
Reliance Nippon Life Asset Management Limited's IPO to open on Wednesday, October 25, 2017
IPO Note - General Insurance Corporation of India (GIC Re): Angel Broking
General Insurance Corporation Of India - IPO Note - Arihant Capital Markets
Indian Energy Exchange - IPO Note - Angel Broking
Indian Energy Exchange Limited IPO to open for subscription on Oct 9, 2017
MAS Financials Services Ltd - On the track to excel - Angel Broking
General Insurance Corporation Of India's IPO to hit markets on Oct 11, 2017
Godrej Agrovet Limited IPO receives huge response with subscription of 90.18 times till 3:45 PM
Godrej Agrovet Limited IPO receives subscription of 33.27 times till 2:30 PM
Godrej Agrovet Limited IPO receives subscription of 4.42 times till 12:00 noon
IPO Note - MAS Financials Services Ltd: Angel Broking
Prataap Snacks Ltd to list today
IPO Note - Godrej Agrovet Limited: Angel Broking
SBI Life Insurance Company Limited to list on Oct 3, 2017
Godrej Agrovet Limited - IPO Note - Sushil Finance
MAS Financial Services Ltd's IPO to open on Oct 6, 2017
Godrej Agrovet Limited fixes IPO price band as Rs. 450 to Rs. 460
SBI Life Insurance Company Limited IPO gets subscription of 3.58 times
Godrej Agrovet Ltd IPO to hit markets on Oct 4, 2017
ICICI Lombard General Insurance Company Limited IPO receives subscription of 2.98 times
Prataap Snacks Limited - IPO Note - Angel Broking
SBI Life Insurance Co Ltd - IPO Note - Angel Broking
Matrimony.com Limited to list on Sep 21, 2017
SBI Life Insurance Company Limited IPO to hit markets on Sep 20, 2017
ICICI Lombard General Insurance Company Limited IPO to close on Sep 19, 2017
Capacit'e Infraprojects Limited IPO receives overwhelming response
Matrimony.com Limited IPO receives subscription of 4.44 times
ICICI Lombard General Insurance Company Ltd - IPO Note - Angel Broking
Capacit'e Infra projects Ltd - IPO Note - Capacit'e for towering growth - Angel Broking
Matrimony.com - IPO Note - Arihant Capital Markets
Capacit'e Infraprojects Ltd - Healthy order book with strong execution... - Geojit
Capacit'e Infraprojects Limited IPO to open for subscription on Sep 13, 2017
Matrimony.com Limited IPO to open for subscription on Sep 11, 2017
Bharat Road Network Limited IPO subscribed 1.81 times
Dixon Technologies India Limited IPO receives subscription of 117.83 times
Matrimony.com - IPO Note - Angel Broking
ICICI Lombard's IPO to hit markets on Sep 15, 2017
Bharat Road Network Ltd - IPO Note - Angel Broking
Dixon Technologies India Ltd - IPO Note - The trajectory of strong client base continues - Angel Broking
IRDAI grants in-principle approval for Reliance General Insurance IPO
Dixon Technology IPO to open for subscription on Sep 6, 2017 - Sushil Finance
Future Enterprises Ltd to divest stake in Future Supply Chain Solutions Ltd through IPO
Bharat Road Network Limited IPO to hit markets on Sep 6, 2017
HDFC updates on proposed IPO of HDFC Standard Life Insurance Company Ltd
Srei Equipment Finance plans to dilute upto 25% of its capital
Cochin Shipyard Ltd - IPO Note - Angel Broking
Security and Intelligence Services (India) Ltd - IPO Note - Angel Broking


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2017