IndusInd Bank reported a standalone net profit of ₹2,123.6 crore in Q1FY24, witnessing a growth of 32.5% from ₹1,603.29 crore in the same quarter last year. Net interest income (NII) increased 18% to ₹5,862.5 crore from ₹4,125.3 crore, YoY.
The private lender’s loan growth was healthy at around 22% YoY and was broad-based across large corporate, mid-small corporate and vehicle segments.
Asset quality remained stable during the June quarter, while slippage ratio improved to 1.9% from 2.7%, sequentially.
Brokerages maintained their bullish view on IndusInd Bank stock and raised their target prices given strong growth prospects of the bank. Here’s what brokerages said:
Morgan Stanley
Morgan Stanley maintained an ‘Overweight’ rating on IndusInd Bank and raised the target price to ₹1,800 per share.
The global brokerage said that the bank’s earnings have been consistent with better retail deposit mix and lower asset quality risk. It expects good returns via compounding, estimate upgrades and re-rating.
Citi
Citi has a Buy rating and raised the target price to ₹1,630, saying that the bank demonstrated stability again along with robust advances in growth.
It is positive on the IndusInd Bank management’s confidence of planning a Cycle 6 strategy, targeted at 18-23% credit growth.
ICICI Securities said despite higher opex YoY, IndusInd Bank reported strong Q1FY24 PAT driven by strong NII and 21% YoY dip in provisions.
“We believe IIB is uniquely placed as growth (18-19% YoY for FY24-25E) has tailwinds from revival in key domains (vehicle and MFI) which due to strong yields should also enable stable NIM. With sharp reduction in RSA (down to 66 bps) and macro tailwinds, we see healthy moderation in credit costs, driving RoA higher,” ICICI Securities said.
Overall, ICICI Securities estimates the bank delivering 1.85%-1.9% RoA for FY24-25E with 15-16% RoE.
The brokerage maintained Buy on the stock and increased its target price to ₹1,700 from ₹1,550 earlier. IndusInd Bank is its preferred pick.
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IndusInd Bank’s operating performance remains on track, led by steady NII growth and controlled provisions. Asset quality remains steady, with fresh slippages declining QoQ in the corporate book. Overall, the outlook for credit cost remains controlled, the domestic brokerage house noted.
“Healthy provisioning in the MFI portfolio and contingent provisioning buffer of 0.6% of loans will enable a decline in credit cost, thus driving earnings recovery. We estimate PAT to report a 27% CAGR over FY23-25, leading to a 17.5% RoE in FY25,”. Motilal Oswal said.
It reiterated Buy rating with a target price of ₹1,600 per share.
JM Financial maintained ‘Buy’ rating with a target price of ₹1,560 per share. It believes while the stock has outperformed Bank Nifty over a year, it still trades at attractive valuations of 1.5x P/B FY25E.
“We believe broad based growth momentum led by positive macros in MFI and vehicle finance industry, strong delivery on profitability metrics and healthy asset quality should aid in future stock price performance,” JM Financial said.
At 10:00 am, the shares of IndusInd Bank were trading 2.04% higher at ₹1,418.65 apiece on the BSE.
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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions
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Updated: 19 Jul 2023, 10:03 AM IST