Shares of IndusInd Bank jumped 4 percent on February 3 on reports that the Reserve Bank of India has granted approval to promoter Hinduja Group to increase its stake in the bank.
Indusind International Holdings Ltd, the promoter of Indusind Bank, is said to have received a go ahead from the banking regulator to increase its stake in the bank to 26 percent from 15.16 percent, according to a Business Line report.
The Hindujas are likely to deploy Rs 8000-10000 crore between June and September to increase their shareholding in the bank.
The go-ahead given by the regulator is in line with the newly introduced RBI (Acquisition and Holding of shares or voting rights in Banking companies) Directions, 2023, the first instance of its promoter increasing its shareholding to 26 percent.
At 9:40 am, the scrip was trading at Rs 1110 on BSE, up 3.2 percent from its previous close. The stock gained for the second consecutive session and rose over 6 percent in this period.
Meanwhile, IndusInd Bank on January 18 reported 58 percent growth in its consolidated net profit for the quarter ending December 2022 to Rs 1,963.54 crore, beating street expectations by a mile.
The net profit growth was partly driven by a sharp 37 percent fall in provisions for the quarter to Rs 1,064. 73 crore from Rs 1,654.20 crore a year ago. The fall in provisioning reflects the drop in bad loans for the lender.
The lender's net profit was also boosted by a healthy 17 percent year-on-year growth in its net interest income to Rs 12,923 crore for the quarter. This came on the back of robust loan growth. Yet another profitability booster was the bank's stable net interest margin (NIM) despite cost pressures on the liabilities side. IndusInd Bank reported an expansion of 17 basis points in its NIM to 4.27 percent.
"IIB’s operating performance remains on track, led by healthy NII growth and controlled provisions. Asset quality remains steady, driven by lower slippages. Thus, the outlook for credit cost remains controlled. The management is guiding for continued momentum in loan growth and is looking to end FY23 with a growth of 20 percent. Healthy provisioning in the MFI portfolio and contingent provisioning buffer of 0.8 percent of loans will enable a steep decline in credit cost, thus driving recovery in earnings", said Motilal Oswal in its recent report to investors.
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