Buy IndusInd Bank; target of Rs 1500: Prabhudas Lilladher

Prabhudas Lilladher's research report on IndusInd Bank

IIB saw a good quarter in context of the concerns surrounding MFI asset quality. While core PPoP missed PLe by 4.8% owing to lower NII/fees; asset quality, the key monitorable for the quarter, was better as slippages at 256bps were lower to PLe by 12bps and provisions at 201bps were 6bps lower. Decline in MFI portfolio has been arrested (-0.5% QoQ vs -11.7% in Q2’25) since disbursals improved to Rs92bn compared to Rs70bn in Q2’25. 30-90 dpd is stable at 4% while collection efficiency in 0-90dpd, improved QoQ to 94.9% from 93.4%. The above metrics suggest that MFI asset quality may not worsen from current levels; GNPA for Q3’25 was 7.05% (vs 6.05% in Q2’25).

Outlook

We expect better credit offtake in Q4’25 leading to improved NIM as healthy disbursals in VF are likely to sustain and MFI might see net credit accretion. Stock is trading at 0.9x on Mar’27 ABV; we maintain multiple of 1.4x and keep TP at Rs1,500. Retain BUY.