Macquarie sees the stock in a positive light. It has an outperform view on the stock with a 12-month target price of Rs 1,850.
After suffering losses for the six consecutive sessions, shares of IndusInd Bank jumped 3.57 percent to close at Rs 1,181.75 on BSE on February 20.
Experts said the stock is rising due to technical factors, as fundamentally there is no significant change in it. The stock is witnessing long build-up on technical charts, indicating that traders are bullish on it.
The stock was under pressure in the last six days on concerns about its exposure to the Vodafone group. Rating agency Moody’s recently downgraded the bank’s outlook to negative, owing to asset quality concerns particularly for the real-estate and telecom books.
Global brokerage firm Macquarie sees the stock in a positive light. It has an outperform view on the stock with a 12-month target price of Rs 1,850.
In a report on February 18, Macquarie said: "Even if entire Vodafone exposure to the bank is written off and say 50 percent of Gems and Jewellery book and 50 percent of real-estate book are written off, the total impact on net-worth is Rs 8,000 crore (adjusted for tax) or 15 percent of FY22E net-worth. This implies an adjusted P/BV of 1.8 times which we believe is still reasonable."
The total exposure to the three main stress sectors–real estate (including lease rentals), telecom and possibly gems and jewellery–stands at nearly 13 percent of the loan book.
"IndusInd Bank's CET-1 at 13.6 percent, including 9-months FY20 profit, gives us the comfort for its ability to absorb losses," Macquarie said.
As per the brokerage, the advantage with IndusInd is that it has a high margin, high ROA (4 percent and 2 percent, respectively) structure to provide for its bad assets and this high margin is coming mainly from its retail book which is stable.Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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