Equitas SFB Q2 PAT at ₹218 Cr, YoY turnaround as provisions halve, GNPA to 2.29%

Equitas Small Finance Bank's standalone PAT came in at ₹218.04 Cr for Q2 FY27, up from just ₹24.14 Cr a year ago (+803% YoY) and up 18.8% sequentially from ₹183.61 Cr in Q1 FY27. The YoY jump is a base effect — Q2 FY26 profit was crushed by elevated microfinance-led credit costs — so the cleaner read is the sequential trend: a second straight profitable quarter with PAT still climbing. Total income was ₹2,357.51 Cr (+27.7% YoY, +5.4% QoQ) on interest earned of ₹2,066.00 Cr, and NPM expanded to 9.25% from 8.29% in Q1 and 1.31% a year ago. This beat our own pre-result expectation of ₹190-200 Cr net profit, even as gross advances (₹50,694 Cr) and deposits (₹52,483 Cr) both landed a touch under the ₹51-52K Cr / ₹53-54K Cr ranges flagged going in. The swing was driven almost entirely by provisions, which fell to ₹114.99 Cr from ₹207.02 Cr a year ago and ₹160.66 Cr in Q1 — confirming management's ~1.5% FY27 credit-cost guidance is being met comfortably. Asset quality backs this up: GNPA eased to 2.29% (Q1: 2.42%, year-ago: 2.92%) and NNPA to 0.70% (Q1: 0.71%, year-ago: 0.98%). Pre-provision operating profit rose to ₹402.37 Cr (+67.3% YoY), but OPM (operating profit/interest earned) actually eased to 19.48% from 20.65% in Q1, so the pre-provision growth engine slowed a touch sequentially even as the bottom line kept improving on lower credit costs. Advances grew 29.58% YoY to ₹50,694 Cr — ahead of management's 20%+ FY27 guidance and above even Q1's 27% pace. Capital adequacy rose to 20.92% (19.44% in Q1) after the bank raised ₹500 Cr of Tier II capital via NCDs listed September 25, 2026, which also bolsters the capital-raise argument in the Street's bull case. Net interest margin is not disclosed in this regulatory filing — management had guided to 7.0-7.1% moderating from Q1's 7.24% — so that watch item stays open pending the press release/concall. A GST matter was also resolved favourably this quarter, with the proposed tax demand cut 95.5%, trimming a contingent liability. No company press release was available alongside this filing to check management's own framing of the quarter against these numbers. Going into Q3, this is the second consecutive quarter of recovery from FY26's microfinance-stress cycle, with profit now growing sequentially rather than merely rebounding off a depressed base. Pre-result Street consensus rated the stock a Strong Buy (target ₹86.53, 19 analysts) on the case of sustained 20%+ advance growth, post-raise capital strength, and a path to 1.5% ROA by Q4 FY27, flagging NIM/execution risk as the key pin; this quarter's non-annualised ROA of 0.32% (Q1: 0.29%, annualising to roughly 1.2-1.3%) and improving asset quality support that path, though NIM confirmation is still pending.