Accumulate IndusInd Bank; target of Rs 371: SKP Securities

SKP Securities is bullish on IndusInd Bank and has recommended accumulate rating on the stock with a target of Rs 371 in its July 12, 2012 research report.

“Indusind Bank (IIB) reiterated its objective of achieving scale along with profitability by posting above industry growth in credit of 31% and alike growth for net profit. The growth in profit was led by 24% rise in NII and striking 48% other income growth. With no assets being restructured during the quarter, it signaled towards the good quality of loan book. The credit costs however increased to 12 bps as provisions were made for one medium sized gem & jewellery account which had turned NPA, the management asserted that recovery was possible in 3-6 months.”

“The strong growth in credit was backed by 48% YoY growth in its higher yielding fixed Consumer Finance Division (CFD) loan book which accounted for 50% of total advances. At present this book is funded by CASA, CFD refinance portfolio and retail fixed deposits.  The management maintains its longer term outlook of funding this book entirely through CASA. We expect 26% growth in IIB’s loan portfolio for FY13E. The strong growth in credit was backed by 48% YoY growth in its higher yielding fixed Consumer Finance Division (CFD) loan book which accounted for 50% of total advances. At present this book is funded by CASA, CFD refinance portfolio and retail fixed deposits.  The management maintains its longer term outlook of funding this book entirely through CASA. We expect 26% growth in IIB’s loan portfolio for FY13E.”

“The bank’s unrelenting show of impressive performance despite challenging times, reflects the bank’s strong and dynamic business model. Our revised TP stands at Rs. 371 valuing IIB at 2.4x its FY14E BV, implying an upside of 7% from current levels. Thus rating it Accumulate,” says SKP Securities research report.   

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