Apr 23, 2012, 11.34 AM | Source: Moneycontrol.com
Motilal Oswal is bullish on IndusInd Bank (IIB) and has recommended buy rating on the stock with a target of Rs 419 in its April 20, 2012 research report.
Motilal Oswal (more)
CMD, Motilal Oswal Financial Services (MOFSL) |
“IndusInd Bank's (IIB) 4QFY12 PAT grew 30% YoY to INR2.23b (in-line with our estimate). While non-interest income was 3% below our estimate, lower-than-expected meant that PAT was in-line.”
“Strong traction in savings account growth: SA customer acquisition increased 14% QoQ and 82% YoY to 0.15m in the quarter. Post deregulation of savings deposits rates, proportion of SA to overall deposits has increased to 11.1% vs 8.6% as on 1HFY12. Growth in SA deposits was robust at+18% QoQ and 53% YoY. Fee income - a key RoA driver: Fee income growth (+60% YoY ) remains strong across all categories. Share of fee income to average assets in 4QFY12 has increased to 1.9% vs 1.5% a year ago - a key ROA driver. Margin performance impressive: Margins remained largely stable (+4bp QoQ) at 3.29% as 11bp increase in cost of funds was offset by 12bp QoQ increase in yield on loans. In a stressed liquidity situation and with a higher proportion of wholesale deposits (50%) in the balance sheet, a largely stable margin QoQ is impressive. Other highlights: (a) High yielding CFD grew ~10% QoQ and 48% YoY and contributed 60%+ of the incremental yearly loan growth. Share of CFD improved further to 49.2% v/s 48.4% in 3QFY12 and 44.4% as of FY11 (b) In absolute terms, GNPA increased 4% QoQ to INR3.5b; Annualized slippage ratio stood at 1.28%”
“IIB's superior margins, focused fee income strategy and control over cost-to-income ratio will keep core operating profitability strong. While asset quality remains strong, we model higher credit cost of 70-80bp over FY13-14 v/s average of 45bp in FY12, to factor in possible rise in delinquencies. However, levers for margin improvement and strong fee income growth will keep RoAs strong at 1.6%+ over FY12/14. Maintain Buy,” says Motilal Oswal research report.
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.
To read the full report click here