Buy IndusInd Bank; target of Rs 2000: ICICI Securities

ICICI Securities's research report on IndusInd Bank

Despite elevated opex, IndusInd Bank (IIB) reported Q4FY24 PAT of INR 23.5bn, up 15% YoY driven by 15% NII growth and ~13% YoY decline in provisioning. RoA remained strong at 1.9% for Q4FY24 as well as FY24. Gross slippages improved QoQ across subsegments, though the bank has part consumed contingent provisions. We believe IIB is well placed on growth, NIM and asset quality troika. IIB has delivered amongst the highest CAGR (FY21-24) in retail deposits, which should sustain, fuelling superior ~18% CAGR in loans over FY24-26. NIM is likely to remain stable, resulting in sector-leading ~17% CAGR in NII and PPoP for FY24-26E. In our view, the bank has 5–15bps improvement scope in each of NIM, opex to assets and credit costs over FY24-26E. Yet,

Outlook

we conservatively factor in cumulative ~5bps RoA expansion to 1.9% (FY25-26E), as we believe IIB would be re-investing in the franchise and/or add contingent provision and/or elongate growth trajectory. Retain BUY; TP unchanged at INR 2,000.