Buy IndusInd Bank; target of Rs 1609: Geojit

Geojit's research report on IndusInd Bank

IndusInd Bank (IIB), a part of the Hinduja Group, provides loans for vehicles and property in its consumer finance division, while the corporate banking division offers a wide range of products to SMEs and large enterprises. Net interest income (NII) grew 4.2% QoQ to Rs. 4,867cr (18.0% YoY), driven by a rise in yield on advances at 12.2% (+20 bps QoQ), despite an increase in the cost of deposits at 6.1% (+31bps QoQ). Gross and net non-performing assets (GNPA/ NNPA) improved sequentially to 1.94%/0.58% in Q1FY24. Gross slippage declined to Rs. 1,376cr (-14.2% QoQ). Healthy assets, improved loan growth, strategic new expansions and controlled non-performing assets (NPA) are expected to support the company’s future earnings potential. Although the cost-to-income ratio remains elevated, management expects it to soften in the future.

Outlook

Hence, we remain positive on the stock and reiterate our BUY rating, with a revised target price of Rs. 1,609, based on 1.75x FY25E BVPS.