Analysts remain positive on IndusInd Bank, expect up to 14% return post Bharat Financial merger

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26 Aug, 2025 12:21

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Research firms maintained their positive views on IndusInd Bank after the private sector lender announced merger of Bharat Financial with itself.

While maintaining buy call with target price of Rs 1,850 per share, Nomura said Bharat Financial merger will not be dilutive for company.

At swap ratio of 0.639 percent, merger will be book & EPS-neutral on FY19 basis, it feels.

Motilal Oswal also reiterated its buy rating with a target of Rs 2,000, saying while the merger is clearly a sweet deal for Bharat Financial shareholders, the bank is set to benefit as merger will be accretive on margins, return on assets, return on equity, earnings per share and book value.

In the medium term, it believes that synergy benefits will arise from reduction in funding cost, fee income opportunity arising from sale of PSL certificates, reduced risk-weights, and increased cross selling opportunities, and this will further boost return ratios for the bank.

"We continue to like IndusInd Bank for its strong earnings/business growth and ability to deliver industry leading margins & RoA," Motilal Oswal said.

IndusInd Bank finally announced the long awaited merger with Bharat Financial Inclusion. As per terms of the agreement, IndusInd will issue 639 shares for every 1,000 shares of Bharat Financial to the latter's shareholders.

Edelweiss Securities, too, has maintained buy call on IndusInd Bank with a target price of Rs 1,920 as it feels financially, merger will be synergistic, capital accretive & will boost return profile.

According to the research house, merger may impact book value by 2-3 percent, but promoter infusion will provide a boost of 6 percent. Edelweiss expects deal to have rub-off effect on valuations of other rural players.

At 14:25 hours IST, the stock price of IndusInd Bank was quoting at Rs 1,723.70, down 1.51 percent while Bharat Financial Inclusion was up 2.57 percent at Rs 1,029.25 on the BSE.