Accumulate IndusInd Bank; target of Rs 1889: KR Choksey

KR Choksey recommended accumulate rating on IndusInd Bank with a target price of Rs 1889 in its research report dated October 13, 2017.

October 16, 2017 / 16:22 IST

26 Aug, 2025 12:21

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KR Choksey's research report on IndusInd Bank

Advances have grown at 24.5% yoy. On back of stable NIMs of 4%, NII has grown by 24.7%. With a strong other income growth of 23.8%, total income has grown by 23.8% to Rs. 30,086 mn. On the operational expenses front, employee costs have grown by 18.4% yoy while other expenses have grown by 20.3%, resulting in an overall opex growth of 19.7%. With a 157 bps improvement in C/I ratio (at 45.7% vs. 47.3% for Q2FY17), operating profit has grown by 27.5%. The improvement in opex is in-line with the management strategy. Provisioning expense has grown by 37% yoy, resulting in annualized credit costs of 0.7%. Credit costs remain unchanged due to stable asset quality. Gross NPA have reduced by 1 bps qoq to 1.08% while net NPA remains unchanged at 0.44%. As a result of robust advances growth, stable NIMs, improved C/I, stable asset quality and low credit costs, the bank has delivered an ROE of 16% (vs. 14.7% for Q2FY17 and 15.6% for Q1FY18).

Outlook

At current price of Rs. 1,747, IIB is trading at 3.3x FY20E adjusted book value. Given the outlook for the bank, we revise our target price upwards and value the bank at 3.5x P/ABV FY20E and arrive at a target price of Rs. 1,889 per share offering a potential upside of 8.1%. Hence, we recommend to ACCUMULATE the stock.

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