Buy IndusInd bank; target Rs 315: Prabhudas Lilladher

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Buy IndusInd bank; target Rs 315: Prabhudas Lilladher

Prabhudas Lilladher is bullish on IndusInd bank (IIB) has recommended buy rating on the stock with a target price of Rs 315 in its January 10, 2012 research report.

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Prabhudas Lilladher is bullish on IndusInd Bank (IIB) has recommended buy rating on the stock with a target price of Rs 315 in its January 10, 2012 research report.

"IndusInd bank's (IIB's) Q3FY12 result was stronger than expected, with net profit of Rs2.06bn, up 34% YoY. Pick-up in SA deposits, stronger-than-expected fee income growth and stable asset quality were the key positives.  SA deposits jumped by ~21% in Q3FY12, with momentum building after the savings de-regulation. Margins did contract by ~10bps QoQ to 3.25% due to a spike in wholesale funding rate and higher SA rates offered. But we expect NIMs to bounce back from Q4FY12, given possible reversal in rate cycle (~48% retail fixed book) and higher SA ratio, aiding margins."

"Loan growth has been robust at ~30% YoY, with the retail book largely driving growth at ~44% YoY growth. Fee income growth continues to remain higher than b/s growth, with very strong trends in thirdparty distribution and FX income. Fee/assets has crossed ~2.0% in Q3FY12 and with fees expected to be a key ROA driver, current trends are very encouraging. Asset quality continues to remain strong with NPAs remaining flat sequentially, leading to lower-than-expected credit costs. IIB's CV portfolio is holding up relatively better, with very limited mining exposure. Even the corporate portfolio remains robust, with ~95% of portfolio being >BBB rated and IIB having no restructuring proposals currently."

"We estimate ROAs at 1.55% in FY13 (in line with consensus) and we see possible upsides from better margins with falling rates and large fixed rate book, better-than-expected fee income growth and upside from stronger-than-expected SA improvement. We maintain our positive view on IIB as asset quality continues to remain robust and delivery on fee income and liability franchise leaves room for upside surprise on ROAs. Buy the stock for target of Rs 315," says Prabhudas Lilladher research report.

FIIs holding more than 30% in Indian cos

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