Synopsis:- Posting its highest-ever quarterly disbursements of Rs. 7,347 crore and a PAT of Rs. 213 crore, up 406 percent year-on-year, Equitas Small Finance Bank has demonstrated in Q4FY26 that its pivot away from microfinance dependency is no longer a work in progress but a completed structural shift, with gold loans and used vehicle finance emerging as fast-growing, high-margin engines.
A Chennai-based small finance bank has closed its strongest quarter in recent memory, and the results tell a story that goes well beyond the numbers. After absorbing one of the toughest microfinance cycles in years, the bank has emerged leaner, more diversified, and structurally repositioned. What looked like a stress story twelve months ago is now shaping up to be a recovery worth watching.
With a market capitalization of Rs. 8,256 crore, shares of Equitas Small Finance Bank were trading at Rs. 72.30 per share on the NSE; the stock hit 11 percent on 4th May 2026 with a 52-week range of Rs. 74.60 to Rs. 50. The stock is trading at a P/E of approximately 80x.
Q4 FY26 Financial Performance
Equitas Small Finance Bank delivered a sharp earnings recovery in Q4FY26, with profit after tax surging 406 percent year-on-year to Rs. 213 crore, up from Rs. 42 crore in Q4FY25 and Rs. 90 crore in Q3FY26. Net Interest Income rose 18 percent YoY to Rs. 981 crore, while net interest margin expanded 57 basis points quarter-on-quarter to 7.29 percent, the sharpest single-quarter NIM improvement in recent periods.
Cost of funds eased 19 basis points during the quarter to 6.94 percent, down from 7.54 percent a year ago. Credit costs fell sharply to 1.11 percent from 1.88 percent in Q3FY26 as MFI stress continued to ease. Net slippages dropped to 0.79 percent, the lowest in ten quarters, while GNPA improved 40 basis points YoY to 2.49 percent and NNPA fell to 0.68 percent. Provision coverage strengthened to 73.03 percent. RoA and RoE came in at 1.46 percent and 14.10 percent, respectively, against 0.32 percent and 2.79 percent in Q4FY25.
On the business side, quarterly disbursements hit a record Rs. 7,347 crore, up 72 percent YoY, with gross advances growing 22 percent YoY to Rs. 46,165 crore. Total deposits stood at Rs. 46,533 crore, up 8 percent YoY.
For the full year FY26, the bank posted PAT of Rs. 103 crore versus Rs. 147 crore in FY25, a decline that reflects heavy provisioning absorbed in H1 before the recovery gathered pace. NII for the year grew 4 percent to Rs. 3,391 crore. The cost-to-income ratio peaked at 75.89 percent in Q2 before cooling to 67.52 percent by March. CRAR remained healthy at 20.31 percent heading into FY27.
Gold and Used Cars: The Turbocharged Niches
Within the secured book, two segments are growing at a pace the headline numbers don’t fully capture. The gold loan portfolio crossed Rs. 850 crore in Q4FY26, having expanded 180 percent year-on-year, making it the fastest-scaling product in the bank’s current portfolio. The ramp reflects both deliberate branch-level activation and a broader shift in borrower preference toward asset-backed credit in the post-MFI stress environment.
Used vehicle finance is telling a similar story. Used car advances grew 31 percent YoY, while used commercial vehicles posted 25 percent growth. Unlike new vehicle financing, the used segment commands a meaningful yield premium, and Equitas, with its deep presence in Tier-2 and Tier-3 markets, is well-positioned to originate at scale where competition from larger banks remains thin.
Both segments carry yield profiles that sit comfortably above the bank’s blended advance yield of 15.51 percent, making them directly accretive to margins at a time when the overall book is repricing upward. Together, they contributed meaningfully to Q4’s record disbursement tally of Rs. 7,347 crore.
Management has guided for continued scale-up in both gold loans and used vehicle finance through FY27, with the bank targeting over 20 percent advance growth and an exit RoA of 1.5 percent by Q4FY27, suggesting these niches are structural growth engines, not cyclical fills.
Conclusion
Equitas Small Finance Bank enters FY27 as a fundamentally different institution than the one that stumbled through FY25. The MFI overhang has cleared, the secured book is compounding, and high-yield niches like gold loans and used vehicle finance are adding structural depth to margins. With record disbursements, improving asset quality, and a recovering RoA, the question for investors is no longer about survival — it’s about the ceiling.
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