Sharekhan's research report on IndusInd Bank
IndusInd Bank (IIB) has informed that the RBI has approved the re-appointment of Mr. Sumant Kathpalia as MD and CEO for a further period of 2 years instead of 3 years, as was proposed by the bank. Neither the RBI nor the bank has provided reasons behind the lower tenure approved. We believe the focus now shifts to improving the core franchise and re-rating would depend upon the sustained earnings progression on guided lines. There had been instances in the past (in case of Federal Bank) where the tenure extension has been lower, but subsequently extension has been given by the RBI for higher tenure depending upon the performance.
Outlook
IIB remains our tactical buy as valuations are cheap at 1.3x/1.1x its BV estimates for FY2024E/FY2025E versus average RoA trajectory expected at ~1.9% over the next two years. Risk to reward is attractive. We maintain Buy with a revised TP of Rs. 1,400.
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