Buy IndusInd Bank; target of Rs 1100: Motilal Oswal

Motilal Oswal is bullish on IndusInd Bank recommended buy rating on the stock with a target price of Rs 1100 in its research report dated March 10, 2025.

Broker Research

March 10, 2025 / 12:17 IST

Buy

26 Aug, 2025 12:21

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Motilal Oswal's research report on IndusInd Bank

The RBI has approved the reappointment of Mr. Sumant Kathpalia as MD & CEO of the bank for a one-year term, effective 24th Mar’25, following the conclusion of his current term. This marks the second instance when the MD’s term extension has been shorter than the board’s proposal. The extension has come amid heightened speculation, and a one-year term will keep uncertainties lingering around the potential leadership transition at the bank. On the other hand, this also gives the bank adequate time to regain normalcy in operations, work on management succession, and address the gaps with the regulator in a planned manner. IIB has reported a muted performance over the past few quarters, led by a combination of factors, including a slowdown in loan growth, asset quality stress and subdued margin performance, all of which have resulted in a ~40% correction in the bank’s stock price over FY25YTD. Additionally, the speculation regarding the MD’s term extension has contributed to further de-rating in the stock price.

Outlook

We cut our FY26E/FY27E earnings by 9%/10% and estimate IIB to deliver RoA of 1.3%/1.4% in FY26/FY27. We believe that at the current valuations IIB is already pricing in most of these uncertainties, and notwithstanding near-term negativity, we find the current valuations inexpensive, particularly as operating performance starts to recover in FY26. Maintain BUY with a revised TP of INR1,100.

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