The Japan Times - Equitas Small Finance Bank rebounds after naming interim chief executive

Following a 19 per cent rout in four days, shares of Equitas Small Finance Bank (Equitas SFB) bounced back on Wednesday after the lender named Balaji Nuthalapadi as the interim CEO, subject to the central bank's approval. The bank, on November 3, said it would its Board of Directors, based on the recommendation of the Nomination and Remuneration Committee, has approved the appointment of Balaji Nuthalapadi, who is currently serving as a Whole-Time Director (Executive Director), as its interim CEO, subject to the approval of the Reserve Bank of India (RBI). Equitas SFB shares rebounded on this development and rose 8. 8 per cent to ₹57. 27 apiece on the BSE. The stock faced antisense selling pressure after P.

N. Vasudevan resigned last week on October 29, having lost 19 per cent in the four trading sessions since, as Equitas SFB declined on three of those days. READ MORE | Institutions must learn to outgrow their founders: Equitas MD & CEO Vasudevan cited persistent investor concerns over a perceived conflict of interest arising from his daughter’s association with a non-banking financial company (NBFC) as the reason behind his exit. On the day of the announcement of his resignation, Equitas SFB shares had crashed 20 per cent in intra-day trade, hitting the lower circuit, before closing over 12 per cent lower at ₹56. 99 on the BSE. Meanwhile, designated interim CEO Nuthalapadi's appointment will take effect from the date of RBI approval or such other date as may be stipulated by the RBI, the lender announced.

Furthermore, Equitas SFB's board has initiated the process of identifying a successor to Vasudevan and will submit its recommendation to the RBI in accordance with applicable regulatory requirements. Commenting on this development, Harshal Dasani, business head at INVAsset PMS, stated that Nuthalapadi's appointment signals continuity and removes the vacuum, but it is subject to RBI approval and is explicitly a bridge to a permanent appointment. Additionally, Dasani observed that the bank underneath has its own issue, and it is the rate cycle rather than the boardroom. Elara Capital post-earnings stated that Equitas' priority is a smooth transition, which is a monitorable and near-term overhang as limited internal bench strength raises the likelihood of an external candidate. Meanwhile, the lender may continue to post an improvement in broader earnings and return metrics, it added. Equitas SFB Q2 results

Supported by healthy other income and lower-than-expected provisions, Equitas SFB beat expectations as it reported its highest-ever profit of ₹218 crore, up 803 per cent year-on-year (YoY) and 19 per cent quarter-on-quarter (QoQ). The management also raised its FY27 advances growth guidance to 25 per cent+ from 20 per cent+ and upgraded its FY27 ROA guidance to 1.35 per cent from 1.20 per cent, while continuously targeting an exit ROA of ~1.5 per cent in Q4FY27. Margin pressure was visible as net interest margin (NIM) for Q2FY27 stood at 6.69 per cent, down 55 bps QoQ. Disclaimer: Views and outlook in this report belong to the brokerages and analysts cited. They do not reflect the views of Business Standard. Readers are advised to exercise discretion.

K.Abe--JT