The private sector lender finally recognised its exposure to troubled Infrastructure Leasing & Financial Services as non-performing in Q4FY19
IndusInd Bank shares gained 0.7 percent intraday on June 12 after global brokerage firm Deutsche Bank retained buy call on the stock. It said it sees 20 percent potential upside given attractive valuations.
The stock corrected last week due to its exposure to DHFL, which had defaulted on debt repayment, but overall in last one month, it gained 14 percent partly due to its quarterly earnings. At 0942 hours IST, it was quoting at Rs 1,596.10, up Rs 8.85, or 0.56 percent on the BSE.
"A lot more synergies will now accrue on liquidity after Bharat Financial merger. We see big option value of utilising Bharat Financial distribution for earning fees and deposits," said the brokerage which has buy call with a target price at Rs 1,900 apiece.
Deutsche expects the Bank to deliver a 2 percent return on assets and 20 percent return on equity in FY21. "IL&FS issue is recognised and other credit-risk should gradually reduce," it said.
The private sector lender finally recognised its exposure to troubled Infrastructure Leasing & Financial Services (IL&FS) as non-performing in Q4FY19, resulting in a spike in provisions and a significant drop in profitability.
However, the good news is that the exposure to other troubled groups is insignificant and the operating parameters of the bank remain sound. With the imminent integration of the high yielding business of Bharat Financial, the earnings outlook is strong and valuation at 2.5 times FY21 estimated book leaves room for a re-rating, Moneycontrol Research said about the company after March quarterly earnings.Disclaimer: The views and investment tips expressed by investment experts on moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.