Key things to watch for IndusInd Bank Q3

Moneycontrol Bureau

IndusInd Bank's March quarter net profit is likely to grow 31 percent year-on-year. Net interest income or the difference between interest earned and paid out would increase more than 35% year-on-year, according to a poll estimate by CNBC Aawaz.
"The key thing to watch for is the quality of CV portfolio. Moreover, the entire kitty of asset financing business needs to be monitored in the wake of rising credit quality threat to this segment. As an investment option IndusInd stock is a quality bet," said a banking analyst from a domestic brokerage firm. He did not wish to be named.
His brokerage has given a 'buy' call setting a target at Rs 480 in the next 12 months. IndusInd shares on Wednesday hit an intra day high of Rs 424 to close the day's trading at Rs 420 on NSE. In the last three months those fell nearly 3% as against more than 6% fall in Bank Nifty – the broader index for banking stocks.
As per the latest data, IndusInd Bank has a CV portfolio of around Rs 10,000 crore or 23% of their total loan book.
Earlier, rating agency Crisil Research expressed concern over loans given to buy commercial vehicles (CVs).
"Delinquencies in commercial vehicle (CV) loans are increasing, with monthly collection ratio (MCR) of CRISIL-rated CV pools dropping below 95 percent for the first time since 2009. This decline in collection efficiency indicates that borrowers are increasingly delaying repayments; there is, therefore, a likelihood of increase in non-performing assets (NPAs) over the next few quarters," said the Crisil report.
The bank's loan book is expected to expand in the range of 26-28 percent y-o-y. Market expects the bank to sustain momentum in its net interest margin. In October-December quarter, the net interest margin (NIM) stood at 3.46% as against 3.25% in the Q2 FY13. Loans grew 31% y-o-y to Rs 42,426 crore.
saikat.das@network18online.com