Axis Direct's research report on IndusInd Bank
IndusInd Bank (IIB) reported a strong PAT growth of 26% YoY (Rs 7.04 bn) in Q2FY17 – the 34th quarter of 25%+ YoY PAT growth – largely driven by strong NII growth (33% YoY). NII growth was supported by 3 bps QoQ uptick in NIM (touched a high of 4%) and robust advances growth. Though advances growth moderated marginally to 26.4% YoY, it still remains significantly higher than the industry’s. Headline asset quality was largely flat, with GNPAs at 0.9% (down 1 bps QoQ).
Maintain BUY with revised TP of Rs 1,400: IIB has delivered a stellar performance with best in class return ratios while gaining market share. It has already met its CASA and NIM targets for FY17 along with a possibility of further benefits from a benign CV cycle and a good monsoon. We upgrade our target multiple to 3.7x FY18E from 3.5x to factor in the best in class performance. Our revised target price stands at Rs 1,400 (upside of 15% from CMP) from Rs 1,300 earlier. At CMP, IIB trades at 3.8x/3.3x FY17E/FY18E ABV of Rs 321/374 respectively.For all recommendations, click here
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