Buy Indusind Bank; target of Rs 1560: Edelweiss
Edelweiss is bullish on Indusind Bank has recommended buy rating on the stock with a target price of Rs 1560 in its research report dated April 19, 2017.
Edelweiss' report on Indusind Bank
While headline asset quality was stable (GNPLs at 93bps), credit cost increased as IIB made one-off provision (INR 1.2bn) against a large corporate standard asset (INR5bn exposure). The bank highlighted this was for a bridge loan for a Merger & Acquisition in cement industry, which is expected to be done by Q1FY18 and consequently is hopeful of reversal. IIB maintained its guidance of delivering sub-60bps credit cost for FY18.
IIB intends to lower cyclicality in business by: a) lowering CV proportion (by raising proportion of non-vehicle retail book); and b) moving towards better rated corporates, drawing support from strengthened liability franchise (lower funding cost). Superior growth, higher fee income and stable credit costs will help it sustain >25% earnings CAGR over FY17-19E. The stock trades at 3.1x FY19E P/ABV. We maintain ‘BUY/SP’ with TP of INR 1,560 (3.5x FY19E P/ABV).
For all recommendations, click here
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.