Accumulate IndusInd Bank; target of Rs 960: Sushil Finance

Sushil Finance's report on IndusInd Bank

Healthy advances growth, higher core-fee income along with stable NIMs has led to strong NII & PAT growth which grew by 18% YoY (7% QoQ) & 25% YoY (11% QoQ) to Rs.9.3 bn & Rs.4.9 bn resp. Core-fee income grew by 29% YoY (~9% QoQ) with all major sustainable streams posting double digit growth except for forex income which was flat YoY. NIM's remained stable to 3.68% QoQ.

Advances grew by 25% YoY (8% QoQ) majorly led by Corporate segment which grew by 33% YoY (~59% of the loan-book). Retail portfolio has shown some improvement & grew by ~15% YoY, being one of the highest YoY growth over the last 6 quarters. Vehicle segment has witnessed some signs of revival & management expects higher momentum in CV segment going forward. Non-vehicle segment like LAP/CC/PL (~18% of retail portfolio) has been witnessing strong growth with LAP growing by ~50% YoY. Deposit grew by 23% YoY (~7% QoQ) while CASA was stable at 34.1%.

Asset Quality improved with GNPA @ 0.8% (1.0% QoQ) & NNPA at 0.31% (0.32%) due to sale to ARC of ~Rs.4 bn (one major account was classified as NPA after RBI declared it as fraud account). Slippages in Q4 came in at Rs.4.5 bn being majorly attributed to the above account (Corporate segment @ Rs.3.2 bn). However management doesn’t foresee any major negative surprise on asset quality in the near term. Restructured book came in flat at 0.53%. CRAR under Basel III stood at ~12.1% with ROE & ROA at ~19.8% & 1.9% resp.

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