Accumulate IndusInd Bank: Arihant capital markets

Arihant capital markets is bullish on IndusInd Bank and has recommended accumulate rating on the stock with a target of Rs 385 in its April research report.

“The Indusind Bank posted profit of Rs. 802crore registering growth of 39% YoY for FY12 even on a backdrop of weak global and a sluggish domestic market conditions. For Q4FY12 top line was very robust which resulted into net profit of Rs. 223 core as against Rs.172 core in Q4FY11registering growth of 30% YoY.”

“NIM’s pressure has reduced marginally with increase in it by 0.04bps taking it at 3.29% in Q4FY12 as against 3.25% in Q3FY12 which is mainly due to just 8% improvement in net interest income on QoQ basis. Interest earned has increased 7% QoQ as the interest on investment and other interest income was down in this quarter as compared to last quarter. Other income of the bank has grown very impressively during this quarter taking quantum of it to Rs 292 crore and YoY growth to 61% which is backed by the 60% YoY growth in core fee income of the bank stands at 262 crore. Bank has been able to meet its guideline of maintaining the cost to income ratio at 50% in Q4FY12 even with the increase in total number of branches to 400. This has been possible due to robust growth in its other income which as supported to report high growth of 33% YoY in its total operating income.”

“Bank is able to continue its history of good asset quality by maintaining its GNPA at 0.98% & NNPA at 0.27% in Q4FY12 as against GNPA of 1.02% & NNPA of 0.29% in Q3FY12. The provision coverage ratio of the bank stands at 72.72% in Q4FY12 as against 72% in last year same quarter. Restructured advances have increased from 0.22% in Q3FY12 to 0.26% in current quarter which involves only small accounts and not any big corporate account. Bank is having just Rs. 50crore bond exposure to the Lavasa which is not yet declared as NPA, it also has exposure of Rs. 100crore to the gold loan segment. We maintain Accumulate rating on the stock; however, we revise our FY13 estimates upwards and increase the target price to Rs 385 (earlier Rs. 314) to factor in the earnings visibility. We value the stock at 3.4X P/ABV FY13E and introduce FY14 estimates,” says Arihant capital market research report.

FIIs holding more than 30% in Indian cos

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