Nirmal Bang is bullish on IndusInd Bank and has recommended buy rating on the stock with a target of Rs 625 in its February 15, 2013 research report.
“IndusInd Bank is placed on strong trajectory to reap the gains from a falling interest-rate regime. With half of the loan book being fixed in nature, the Bank should register a significant improvement in margins and also maintain strong asset quality. The NIM expansion in the previous two quarters (3bps and 21 bps respectively) is the beginning and we expect a much more stronger and sustainable growth in the NIM segment, going forward. The growth in the fee income segment is expected to be robust going forward. The complete product portfolio coupled with enhanced branch network and more than half of this income de-linked to the Balance Sheet, we expect this segment to grow higher than the Balance Sheet. With the recent Qualified Institutional Placement (QIP), the Bank is adequately funded for the next three years.”
“The management’s disciplined approach should help to keep a tab on the asset quality. Inspite of having more than 25 per cent exposure to the CV segment and 49 per cent to the vehicle portfolio, we are quite confident that the asset quality should remain quite robust.”
“We expect IndusInd Bank to post a net profit of Rs.1044.1 crore on Net Interest Income of Rs.2230 crore in FY’13E. We expect the Bank to clock a net profit of Rs.1340 crore on Net Interest Income of Rs.2862 crore for FY’14E. This translates into an EPS of Rs.25.7 for FY’14E. We expect significant traction in FY’15E and expect the Bank to post a PAT of Rs.1745 crore, translating into an EPS of Rs.33.2 and an adj. book value of Rs.192. We expect the valuation to improve going forward and looking at the consistency in earnings, we assign a value of 3.25x FY’15E adj. book value (of Rs.192) to arrive at a price target of Rs.625 over the next 15-18 months,” says Nirmal Bang research report.
FIIs holding more than 30% in Indian cos
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