Equitas Small Finance Bank shares hit new 52-week high – here’s why

Equitas Small Finance Bank (SFB) share price touched a fresh 52-week high of Rs 63.90 per share, after surging almost 7.5 per cent on the BSE intraday on Wednesday. The stock of SFB, which is backed by several Mutual Fund firms, and a foreign investor has jumped over 54 per cent in 6 months.  

The buying sentiment in Equitas SFB's share price can mainly be attributed to the Reserve Bank of India (RBI) approval of the State Bank of India (SBI) mutual fund arm’s plan to acquire an additional stake in the bank. 

As per the exchange filing of Equitas SFB, “The Bank has received an intimation from RBI on January 03, 2023, according to approval to M/s SBI Funds Management Limited (SBIFML) to acquire up to 9.99% of the paid-up equity capital of the Bank through the schemes of SBI Mutual Fund (SBIMF).” 

The counter has breached its previous high of Rs 63.10, hit on December 13, 2022. The scrip closed flat paring all gains to Rs 59.35 per share on the BSE as compared to a 1.06 per cent fall in the S&P BSE Sensex today.  

As on September 30, 2022, SBI Large & Midcap Fund held a 3.09 per cent stake in Equitas SFB, the shareholding pattern of the bank revealed. Besides SBI MF, other mutual fund companies such as Nippon India, Franklin India and HDFC Trustee are also investors in the bank. 

Moreover, ICICI Pru Life Insurance company also holds over 1 per cent stake, similarly, a foreign portfolio investor (FPI) Government of Singapore, has over 2.5 per cent holding in Equitas SFB as per September 2022 shareholding pattern available on the BSE. 

Akshay Jain of JM Financial expects Equitas SFB’s Return on Assets (RoA) trajectory to start reflecting better operating leverage as well as lower credit costs going forward. Liabilities traction for the bank is sustaining well given the pricing advantage and clarity on CEO succession will be a key trigger. 

Shares of Equitas Holdings, the promoter of Equitas SFB, also touched a new 52-week high of Rs 136.60, after gaining almost 6 per cent on the BSE in intra-day trade today.