Prabhudas Lilladher's research report on IndusInd Bank
Key highlight of IIB analyst meet was that focus is on strong asset growth that would be funded by RTD while underwriting has been tightened so as to keep stress formation controlled. Branch expansion and investments in technology may keep opex elevated, though PPoP to loan ratio may surpass 5.5% (over PC-6) from 5.3% in FY22. Expanding in home markets would be a key driver to business growth. The bank is targeting a CASA ratio of >45% while retail to wholesale loan mix could change from 52:48 to 60:40. Better earnings quality is also a focus area. While asset growth may be achievable, material RTD growth might not be easy given tightened systemic liquidity.
However, asset quality risks have abated and RoE improvement from 10% to 15% over FY22-24E warrants a higher valuation. Maintain multiple at 1.8x on FY24 ABV and retain BUY with TP at Rs1,300.
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