Accumulate IndusInd Bank; target of Rs 1640: Prabhudas Lilladher

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Prabhudas Lilladher's research report on IndusInd Bank

IIB reported earnings of Rs13.0bn (PLe: Rs15.4bn) was below our estimate largely on higher provisioning including an Rs2.5bn of accelerated provisioning to enhance PCR to 53% (`300bps up QoQ). Headline asset quality was steady on better asset recoveries & few write-offs but internals showcase higher than trend slippages in both corporate - largely emanating from known stress watch list & consumer - mostly in CV/Cards/MFI. Positives have been further improvement in NIMs by 5bps QoQ to 4.15%, strong SA growth of 30% YoY/11% QoQ. We believe, it will be very important to see new MD's strategy on corporate book given questions surrounding asset quality and retailization of liabilities, while asset quality and provisioning will remain higher from trend levels.

Outlook

We downgrade to Accumulate and retain TP of Rs1,640 (unchanged) based on 2.5x Sep FY22 ABV.

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