Accumulate IndusInd Bank; target of Rs 1322: Arihant Capital

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26 Aug, 2025 12:21

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Arihant Capital's research report on IndusInd Bank

IndusInd Bank (IIB) has reported decent performance during Q2FY22 with strong profit growth of 72% YoY to INR 1,114 cr vs. our estimate of INR 1,102 cr. Profit growth for the quarter was higher due to 13% YoY/8% QoQ decline in provisions. With the pick in business momentum and opening up of economy, loan growth of the bank has picked up. Advances of the bank increased by 10% YoY as compared to 6% YoY growth in the previous quarter led by strong growth in Corporate portfolio. NII for the quarter grew by 12% YoY/3% QoQ to INR 3,658 cr was marginally ahead of our estimate of INR 3,658 cr. Operating profit of the bank increased by 12% YoY/1% QoQ to INR 3,174 cr vs our estimate of INR 3,101 cr. Contingent provision of the bank has increased from INR 2,050 cr (1% of loans) to INR 3,178 cr (1.4% of loans) as bank has prudently provided for its telecom exposure. Total loan related provision of the bank increased from 3.6% to 3.9% of total loans. Headline NPA ratio of the bank improved with GNPA/NNPA improvement of 11bps/4bps QoQ at 2.8%/0.8%. Restructuring pool has increased from 2.7% to 3.6% of loans on sequential basis.

Outlook

We roll forward our estimates to FY24E and maintain our ‘Accumulate’ rating on the stock with a revised TP of INR 1,322 (earlier INR 1,095), based on 1.7x FY24E ABV.

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