Buy Indusind Bank; target of Rs 1275: Emkay Global Financial

Emkay Global Financial is bullish on Indusind Bank has recommended buy rating on the stock with a target price of Rs 1275 in its research report dated July 28, 2022.

Broker Research

July 29, 2022 / 05:04 PM IST

The research firm ICICI Securities believes earnings of apparel brands and retail companies under their coverage may surprise positively from Q3FY22E as the likely demand recovery may result in better than expected margin performance. Some of the costs savings achieved during pandemic may sustain and coupled with high operating leverage may lead to higher than pre-covid margins from Q3FY22E. Stocks like Trent, V-Mart and Aditya Birla Fashion and Retail are the preferred picks backed by their strong and consistent track record of execution.

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Emkay Global Financial Market's research report on Indusind Bank

The bank hosted an analyst meet to showcase its reorganized management profile, give an update on Planning Cycle 5 and provide some insights into Planning Cycle 6. The KTAs: Well on course to achieve PC 5 goals despite Covid shock; PC 6 to focus on building scale with profitability and sustainability: Under the Planning Cycle (PC) 5, the bank has fortified its retail liability franchise, fine-tuned its corporate banking business, launched the holistic Bharat Banking model, ramped up digital compatibility and initiated new growth boosters (Home/gold loan) and completed management reorganization. Under PC 6, it plans to further improve its CASA ratio to >45%, re-accelerate growth across consumer/corporate banking segments with continued focus on market share gains, granularization & higher RoRWA, and launch investment/para-banking (Broking, AMC, etc.), thus delivering PPOP/loans of >5.5% on a sustainable basis.

Outlook

Retain Buy with a TP of Rs1,275 (valuing core bank at 1.7x Jun’24E ABV). Key risks: Delayed assetquality normalization and senior management attrition.