01 — At a Glance
The Small Bank That Had a Big Identity Crisis
- 52-Week High / Low₹73.4 / ₹50.0
- Q3 FY26 Revenue₹1,692 Cr
- Q3 FY26 PAT₹90 Cr
- Q3 FY26 EPS₹0.79
- Annualised EPS (Q3×4)₹3.16
- Book Value₹51.4
- Price to Book1.10x
- Dividend Yield0.00%
- Debt / Equity8.12x
- GNPA / NNPA2.62% / 0.88%
The Bottom Line (Literally): Equitas reported ₹90 crore PAT in Q3 FY26, up 36% YoY and 273% QoQ. But let’s be honest—Q1 saw a ₹224 crore loss, so beating a crater isn’t exactly a standing ovation. ROA improved from -1.78% (Q1) to 0.65% (Q3). Management says it’s “in line for 1% exit ROA by Q4.” Microfinance collections have improved. Regional concentration is still 74% in South. And the stock has done exactly nothing for 5 years while the market waited. This is what cautious optimism looks like.
02 — Introduction
Small Finance Banking: Where “Diversification” Means “Please Let One Asset Class Work”
Equitas Small Finance Bank was born from a microfinance outfit (founded 2007) that evolved into a bank (2016), then panicked in 2024 when its microfinance portfolio started acting like actual microfinance—stressed, delinquent, and prone to dramatic write-offs.
The bank does this: lend to self-employed borrowers, auto buyers, small business owners, and people trying to refinance their way through a tough monsoon season. They operate 1,035 banking outlets (mostly concentrated in Tamil Nadu, Maharashtra, Karnataka) and sit on ₹43,668 crore in deposits.
In Q1 FY26, Equitas confessed it lost ₹224 crore. The confession came with a caveat: “We changed our provisioning policy.” Translation: “We realised our microfinance book was way riskier than we let on, so we took the nuclear option and cleaned up.” By Q3, after three quarters of collections, policy tweaks, and management talking about “reversals,” the bank posted ₹90 crore profit. The street celebrated by ignoring it. Stock is down 0.62% YTD.
This is a bank that has never returned a penny in dividends. Its 5-year stock CAGR is -0.69%. Its ROA in FY25 was 0.30%. Yet management is now guiding ROA to 1% by Q4 FY26 and 1.5% by Q4 FY27. Investors are waiting to see if the projections hold or if another microfinance surprise is lurking in the back room.
From the Jan 2026 Concall: “Microfinance has stopped degrowing.” That’s management’s phrasing for “the death spiral has paused.” Celebrate as you see fit.
03 — Business Model: The Art of Lending to People Who Really Need Money
We Lend to Underbanked Folks (And Hope They Pay Back)
Equitas operates a fairly typical small finance bank model: take deposits, lend to self-employed people and SMEs that traditional banks won’t touch, collect repayments, repeat. The book is roughly 45% small business loans (SBL), 25% vehicle finance, 9% microfinance (down from 18% in FY24), and 13% housing finance.
The SBL portfolio is entirely property-secured (management was emphatic on concall: “SBL is 100% property-secured,” pushback to “unsecured” perception). Vehicle finance is skewed toward used CVs and used cars. Housing loans are in “affordable housing” (management says this segment “turned the corner” and is now profitable after losses last year). Microfinance is now a “controlled enhancer” targeting 10% of book—not a growth engine.
All of this adds up to a bank serving 400,000+ borrowers across 18 states with 1,035 branches, 376 ATMs, and a deposit base that grew to ₹43,668 crore (up 7% YoY in Q3, after the bank intentionally slowed deposits in Q2 to manage excess liquidity). CASA ratio is 30% (term deposits are the bread and butter).
Geographic concentration remains the elephant: Tamil Nadu is 46% of advances, followed by Maharashtra (15%) and Karnataka (13%). Top 5 states account for 84% of advances. Management is trying to diversify but acknowledged it’ll take 3–4 years to bring Tamil Nadu down to 36% of the book.
SBL Mix45%100% Secured
Vehicle Finance25%Mostly Used
Housing Finance13%Now Profitable
Microfinance9%Being Managed Down
Tamil Nadu Crisis Watch: The state accounted for 46% of advances, 28% of deposits. If monsoon fails. If crop crisis hits. If local money-lending laws change (hello, Tamil Nadu Money Lending Act 2025). The concentration risk is not theoretical. Management’s “3–4 year plan” to reduce Tamil Nadu to 36% sounds nice. Let’s see it happen.
💬 How many small finance banks are actually “small” anymore when they have ₹52,836 crore in assets and 25,865 employees? Drop your thoughts on whether Equitas should go universal.
04 — Financials Overview: Q3 FY26
The Numbers: Climbing Out of the Crater
