Buy IndusInd Bank; target of Rs 1700: Motilal Oswal

Motilal Oswal's research report on IndusInd Bank

IndusInd Bank (IIB) posted a 1QFY25 PAT of ~INR21.7b (7% miss) due to modest revenue growth. NII grew 11% YoY to INR54.1b (3% miss) and other income rose 10.5% YoY to INR24.4b (5% miss). NIM was broadly stable at 4.25%. Loan book grew 15% YoY (1.3% QoQ), led by corporate book. Deposits grew 15% YoY (4% QoQ), led by term deposits. CASA ratio moderated 121bp QoQ to 36.7%. Growth in the card business was muted. Fresh slippages increased 7.6% QoQ to INR15.4b, primarily due to a rise in slippages in the consumer finance book to INR14.9b. GNPA/NNPA ratios increased 10bp/3bp QoQ to 2.02%/0.6%. The bank did not utilize any contingent provisions and held INR10b of contingency buffer as of Jun’24. We cut our earnings estimates by 7.7%/8.0% for FY25/26, leading to an RoA/RoE of 1.83%/15.4% by FY26E. We reiterate our BUY rating on the stock with a TP of INR1,700 (premised on 1.7x FY26E ABV).

Outlook

We cut our earnings estimates by 7.7%/8.0% for FY25/26, leading to an RoA/RoE of 1.83%/15.4% by FY26. We reiterate our BUY rating on the stock with a TP of INR1,700 (premised on 1.7x FY26E ABV).