Buy IndusInd Bank; target of Rs 1500: Prabhudas Lilladher

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26 Aug, 2025 12:21

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IIB saw another good quarter with core PPoP at Rs33.5bn (+6% to PLe) led by slight beat on NII, fees and opex. Loan growth at ~5% QoQ was largely led by vehicle finance (+7%), other retail (+6%) and corporate (+4%). Bank expects current run-rate of vehicle disbursals to sustain in Q4FY23E. Due to recent SA rate hike of 150bps in Oct’22, NIM only saw a 2bps QoQ rise to 4.6%. However, NIM in Q4 could surprise positively (PLe +5bps QoQ), compared to a fall in case of peers, as 35-40% of the portfolio is fixed rate in nature, which reprices to rate hikes with a lag. Provisions were lower due to utilization of Rs4.6bn buffer provisions (now 80bps) while OTR pool decreased QoQ from 1.5% to 1.25%. We like IIB, although approval of MD&CEO term by RBI and RTD accretion remain key monitorable.

We raise FY23E PAT by ~6% due to better revenues/lower provisions and increase TP to Rs1,500 from Rs1,450, maintain multiple at 1.8x on Sep’24 ABV. Retain BUY.

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