Buy IndusInd Bank; target of Rs 1850: Motilal Oswal

Motilal Oswal's research report on IndusInd Bank

IndusInd Bank (IIB) reported an in-line 4QFY24 performance. PAT grew 15% YoY to INR23.5b (in line), aided by healthy revenue growth and lower provisions (aided by reversal of INR3b of contingent provisions).Loan growth was healthy at 18.4% YoY to INR3.4t, with healthy traction in the consumer finance segment. Deposits grew 14.4% YoY to INR3.8t, led by term deposits. The CASA ratio moderated 61bp QoQ to 37.9%.Fresh slippages moderated ~19% QoQ to INR14.3b, primarily driven by a decline in slippages in the corporate book to INR1.6b and consumer finance book to INR12.7b. GNPA/NNPA ratios remained stable at 1.92%/0.57%. Restructured book declined 8bp QoQ to 0.4%.

Outlook

We estimate IIB to deliver a ~21% earnings CAGR over FY24-26, leading to RoA/RoE of 2.1%/16.8% by FY26. We reiterate our BUY rating on the stock with a TP of INR1,850.