Buy IndusInd Bank; target of Rs 1350: Emkay Global Financial

Emkay Global Financial is bullish on IndusInd Bank has recommended buy rating on the stock with a target price of Rs 1350 in its research report dated May 01, 2022.

Broker Research

May 03, 2022 / 11:41 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.

26 Aug, 2025 12:21

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Emkay Global Financial's report on IndusInd Bank

IIB reported a slight miss on PAT at Rs14bn (est.: Rs15bn), mainly due to higher provisions and elevated opex (a phenomenon seen across private banks) due to investments in the franchise and technology. The GNPA ratio improved by 21bps qoq to 2.3%, thanks to the moderation in slippages. However, the restructured book still remained high at 2.6%. Credit growth was relatively moderate at 12% yoy/5% qoq due to slow growth in the retail book, offset in part by high corporate growth. However, the bank believes that disbursement trends are improving in the CV/UV/Car segments, while MFI will continue to grow at a fast pace. Growth of the diamond portfolio could be dragged by trade disruptions arising from the Russia-Ukraine conflict, but IIB does not see any asset-quality risks. With asset-quality stress largely behind the bank and a healthy contingent buffer (0.8% of loans ex-RSA) in place, IIB has guided for NIMs of 4.1-4.25%, PPoP>5% of loans and 1.25-1.5% credit cost (looks slightly optimistic). We retain our FY24-25E EPS and introduce FY25 estimates. We expect a RoE of 13-16% for FY23-25E.

Outlook

We maintain our Buy rating with a TP of Rs1,350 based on 1.8x FY24E ABV vs. 1.9x Dec'23E ABV earlier, given the steady improvement in its liability profile after a deposit scare, reacceleration of credit growth, expected improvement in return ratios and reasonable valuations. The bank is likely to soon appoint a CEO for the MFI business, after a spate of resignations and alleged misconduct.

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