Moneycontrol
Jan 12, 2018 09:21 AM IST | Source: Moneycontrol.com

IndusInd Bank rises 1% post Q3 show; brokerages remain upbeat

The private sector lender reported nearly 25 percent growth in profit at Rs 936.2 crore for quarter ended December 2017 YoY, which was largely in line with estimates, but asset quality weakened a bit sequentially.

 
 
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IndusInd Bank’s shares rose over 1 percent intraday on Friday as investors cheered the bank’s positive result trends for the December quarter.

The private sector lender reported nearly 25 percent growth in profit at Rs 936.2 crore for quarter ended December 2017 YoY, which was largely in line with estimates, but asset quality weakened a bit sequentially.

Profit in year-ago quarter had reported at Rs 750.64 crore by the bank. Other income, operating income and NII boosted profitability.

Net interest income missed analyst estimates, growing by 20 percent year-on-year to Rs 1,895 crore, from Rs 1,578.4 crore in corresponding quarter.

The bank has registered credit growth of 25 percent for the quarter YoY, which was in line with estimates while deposits grew by 23 percent with saving deposits growth at 68 percent.

Brokerages were largely positive on the stock, citing positive trends from the results as well as progress in retail segment.

Brokerage: Macquarie | Rating: Outperform | Target: Raised to Rs 1,962

Macquarie said that the bank continues to report steady, in-line numbers. Further, acquisition of Bharat Financial Inclusion is progressing smoothly & likely to be completed by Q2FY19. It also observed that CASA deposits forming 43% of overall deposits is very positive. Bharat Financial merger and non-CV retail growth and proposed insurance foray as key catalysts.

Brokerage: Nomura | Rating: Buy | Target: Rs 1,950

Nomura said that sharp uptick in vehicle loan growth & strong CASA growth were key highlights in Q3. Further, SMA-2 book of less than Rs 1,000 crore provides comfort w.r.t divergence-related negative surprises. An improvement in credit RWA/loans aiding further margin improvement. The bank is also fast closing its liability gap with larger private banks.

Brokerage: Kotak Sec | Rating: Reduce | Target: Rs 1,750

Kotak Securities observed that retail segment shone, while yields were under pressure. A strong overall performance was seen and broadly stable trends were seen in impairment ratios. Current valuations are closer to fair value even as business remains on a strong footing.

Brokerage: Quant | Rating: Accumulate | Target: Rs 1,994

Quant said that margin remained stable primarily from improvement in liability franchise. Meanwhile, asset quality was stable with total stress on the book increasing 6 bps qoq. It remains constructive on bank considering healthy & stable performance outlook. Slowdown in loan growth & further stress in asset quality are key risks.

Brokerage: Citi | Rating: Buy | Target: Rs 2,060

Citi said that the bank continues to see strong operating trends across balancesheet growth. The firm its top pick in Indian financial sector.

Brokerage: Prabhudas Lilladher | Rating: Buy | Target: Cut to Rs 1,915

The brokerage observed that CASA continues to grow but growth intensity was lower due to demonetisation base effect. Lower corporate slippages led to lower credit cost of 60 bps, it added.
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