Equitas Small Finance Bank shares ticked up 2.5% to ₹28.30 after the bank announced it will lift its FY27 advances growth forecast to above 25%, building on a 28% jump in the April‑June quarter.―PN Vasudevan, Managing Director and CEO, said the lift will take effect once the second‑half results are filed, noting the traditionally stronger credit uptake in the latter half.
In the first quarter, the bank recorded a credit cost of 1.36%—well below the 1.5% guidance—while its net interest margin stood at 7.24%. The margin faces a 15‑basis‑point compression from higher deposit rates, but lower credit costs and reduced operating expenses will cushion the hit, Vasudevan explained.
Shares have surged 19% year‑to‑date, and the market capitalisation sits at ₹7,697.69 crore. Compared to the broader SFB segment, which averaged a 20% advances growth in FY27, Equitas’s revised outlook puts it at the top of the pack.
Drought in Maharashtra—affecting 74% of the state—has little bearing on the bank’s asset quality. Micro‑finance loans, which make up only 10–11% of total advances, contribute 2–2.5% of the book from Maharashtra, and repayment patterns are stable at 99.7%‑99.75%.
Insurance distribution revenue last year was ₹95‑100 crore, with credit‑shield policies about ₹50 crore. If the IRDA’s commission cut hits half the rate, the bank could lose ₹25‑30 crore—roughly 2‑2.5% of its annual profit—yet the impact remains marginal.
The company now projects full‑year credit costs to drop below the 1.5% mark, a return on assets target of 1.2% for the year, and a Q4 exit rate of 1.5%. The upcoming Q2 results will confirm whether the upward revision materialises, and the market will watch closely for any further upside in the bank’s guidance.