Small Finance Bank Stocks In India – July 2024

India’s financial system has changed a lot in recent years, focusing more on making banking available to everyone. A major part of this change has been the rise of Small Finance Banks (SFBs). Introduced by the Reserve Bank of India (RBI) in 2015, SFBs were envisioned as specialised banks to cater to the underserved and unbanked sections of the population.

SFBs aim to help small businesses, small farmers, and people working in the informal sector. They have been crucial in providing basic banking services like savings accounts and loans to many people in rural and semi-urban areas who didn’t have access to banks before. As of July 2024, there are 12 Small Finance Banks operating in India. Some of these banks are even listed on the stock exchanges. In this article, check the list of the best small finance bank stocks in India based on their market cap.

Small Finance Bank Stocks In India – July 2024

Note: The list of small finance bank stocks in India listed here is as of July 30, 2024. The stocks are sorted as per their market cap.

Overview Of 5 Small Finance Bank Stocks In India

1. AU Small Finance Bank Ltd

Started as a Jaipur-based vehicle finance company and incorporated in 1996, AU Small Finance Bank changed to a small finance bank in 2017 and entered the list of Fortune 500 companies in India in 2019. The bank reported that in FY 2024, the Net Interest Income (NII) grew 17% YoY to ₹5,157 crore in FY24 compared to ₹4,425 crore in FY23. Net profit excluding exceptional items at ₹1,592 crore in FY24 is up by 12% YoY compared to ₹1,428 crore in FY23.

Key financial metrics

• Net Profit Margin: 12.48%

• Return on Equity: 13.04%

2. Equitas Small Finance Bank Ltd

Equitas Small Finance Bank was founded in 2016 and was listed in 2020. Equitas Holding is its holding company. The bank reported its highest PAT of ₹799 crore in FY24, compared to ₹574 crore in FY23, reflecting a 39% year-over-year growth.

Key financial metrics

• Net Profit Margin: 12.71%
• Return on Equity: 12.20%

3. Ujjivan Small Finance Bank Ltd

Ujjivan Small Finance Bank is a prominent player in the microfinance industry. The bank offers a variety of banking services to individuals and small businesses in rural and semi-urban India. For Q4FY24, the NII was ₹934 crore, up 27% year-over-year, and ₹3,409 crore for FY24, up 26% year-over-year, with a Net Interest Margin (NIM) of 9.4% for Q4FY24 and 9.1% for FY24.

Key financial metrics

• Net Profit Margin: 19.83%
• Return on Equity: 26.09%

4. Jana Small Finance Bank Ltd

Jana Small Finance Bank specialises in providing financial services to underserved communities. The bank’s product offerings cater to the specific needs of its target market, with a focus on micro-entrepreneurs and small farmers. The bank’s Net Interest Income increased to ₹2,127 crore in FY24 from ₹1,660 crore in FY23, representing a 28.1% year-over-year growth. Profit After Tax rose to ₹670 crore in FY24, up from ₹256 crore in FY23, marking a significant 162% year-over-year increase.

Key financial metrics

• Net Profit Margin: 14.29%
• Return on Equity: 24.92%

5. Utkarsh Small Finance Bank Ltd

Utkarsh Small Finance Bank is rapidly growing its presence in rural India. The bank offers a range of financial products and services, such as savings accounts, term deposits, loans, etc. As for FY24, profit after tax increased by 23% to ₹498 crore compared to ₹405 crore in FY23.

Key financial metrics

• Net Profit Margin: 13.90%

• Return on Equity: 20.01%

Small Finance Bank Industry In India

Small Finance Banks have attracted substantial public interest since their inception. CASA (Current Account Savings Accounts) deposits for SFBs have grown at an impressive rate of 66% CAGR from FY 2018 to 2023. Additionally, the advances under management (which includes gross advances plus off-balance sheet advances) for SFBs have seen a 29% CAGR from March 31, 2018, to June 30, 2023.

Looking ahead, CRISIL MI&A projects that SFBs’ advances under management will grow at a rate of approximately 22-24% CAGR from June 30, 2023, to March 31, 2025. This growth is expected as most SFBs have completed their transition phase and are set to benefit from increased operational efficiency.

By the end of June 2023, SFB deposits reached ₹1,971 billion. CRISIL MI&A forecasts that SFB deposits will grow at a rate of 40-45% CAGR between June 2023 and March 2025. This growth will be driven by SFBs focusing on promoting convenient banking practices, reaching underserved areas, and enhancing financial inclusion.

SFBs have been steadily expanding their branch networks, with the number of branches increasing at a CAGR of 29% since March 2018. These branches are spread across India, with South India having the highest concentration at 28%, followed by the Western region with 20%.

Conclusion

Now that you know about some of the best small finance bank stocks in India, try learning more about the Indian stock market. Explore more about stocks and mutual funds on Angel One.

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Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.