Moneycontrol
Apr 20, 2017 02:24 PM IST | Source: Moneycontrol.com

Analysts stay bullish on IndusInd despite one-off provisions restrict Q4 profit growth

Citi, maintained its buy rating on the stock with an increased target price of Rs 1,640 (from Rs 1,380), saying it sees another three years of strong growth.

 
 
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Majority of brokerage houses retained their bullish stance on IndusInd Bank, citing strong performance excluding one-off provisions in the quarter ended March 2017.

Profit during the quarter increased 21 percent to Rs 751.6 crore but excluding provisions, the bottomline growth was 34 percent. Provisions doubled to Rs 430.1 crore QoQ due to one-off amount of Rs 122 crore on a bridge loan for a cement M&A transaction (account remains standard), where the receivable is in June. Hence, the amount is likely to get reversed in Q1FY18, Motilal Oswal says while maintaining buy call on the stock with a target price of Rs 1,700.

The one-off provisioning as well as ARC sales led to higher provisioning and this should normalise in the first half of this fiscal, Nomura believes.

The brokerage house expects bank to show 25 percent EPS growth over FY17-20. It has also maintained its buy call with an increased target to Rs 1,640 (from Rs 1,400).

Citi, too, maintained its buy rating on the stock with an increased target price of Rs 1,640 (from Rs 1,380), saying it sees another three years of strong growth and observed continuity in operational momentum and mix improvement.

Net interest income of the bank during the quarter grew by 31 percent led by strong loan growth of 28 percent and 6 basis points improvement in net interest margin.

The bank is targeting 25-30 percent loan growth, driven by continued branch expansion and strong customer acquisition. Strong core profitability, an improving CASA ratio and healthy return

ratios are the key positives, says Motilal Oswal which upgraded its estimates for bank by 4-5 percent to account for higher growth.

Morgan Stanley is overweight on the stock with a target of Rs 1,600, saying bank's pre-provision operating Profit growth stayed strong with accelerating loan growth.

JPMorgan is also overweight on the stock with an increased target of Rs 1,675.

Bank of America Merrill Lynch has reiterated a buy call with an increased target of Rs 1,600 (from Rs 1,530), saying the asset quality is manageable. Net non-performing assets remained unchanged at 0.39 percent QoQ in Q4.

BoAML says there is scope for a raise in EPS in falling rate environment.

However, Goldman Sachs has a neutral call on the stock with a target of Rs 1,384. It raised FY18-19 EPS by 2.3-2.6 percent on Q4 numbers.

At 13:17 hours IST, the stock was quoting at Rs 1,429.75, up Rs 7.00, or 0.49 percent on the BSE.

Posted by Sunil Shankar Matkar
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