Buy IndusInd Bank; target of Rs 1530: Prabhudas Lilladher

Prabhudas Lilladher's research report on IndusInd Bank

IndusInd Bank (IIB) saw a steady quarter with core PPoP in-line at Rs36.9bn. Sequential loan accretion at 6.3% was largely led by consumer finance (+6.8% QoQ) that was attributable to MFI/CV/UV/cars. Bank laid out the PC-6 strategy as a runway to FY23-26E with targeted loan growth of 18-23% and increase in retail share to 55-60% (now 49%). Pace of retail deposit (as per LCR) accretion would be a key driver to loan growth and we are factoring a 18% loan CAGR over FY23-25E. Adding branches would be necessary for strong retail business growth, and we see cost to income at average 45.6% in FY24/25E (44.3% in FY23). Asset quality has been stable and buffer provisions are 66bps; bank would like to further build these provisions.

Outlook

We expect RoE to enhance from 14.5% to 16.2% over FY23-25E. Keeping multiple at 1.8x, we slightly raise TP to Rs1,530 from Rs1,500 as we roll forward to Mar’25 ABV. Retain ‘BUY’.