Buy IndusInd Bank; target of Rs 1650: Sharekhan

Sharekhan's research report on IndusInd Bank

IndusInd Bank is likely to outperform the sector in terms of earnings growth, led by stable NIMs, strong loan growth and lower credit cost, which could translate into higher RoA. Near-term business growth outlook looks comfortable, led by a benign corporate credit cycle, stable CV and MFI cycle, which should support operating profit growth. We believe there is still headroom for reduction in credit cost and it augurs well in case there is higher-than-expected growth in operating cost in FY2024, as the bank continues to invest in the franchise for future growth.

Outlook

The stock trades at 1.7x/1.5x its BV estimates for FY2024E/FY2025E vs. average RoA trajectory expected at ~1.9% over the next two years. We believe re-rating is expected given sustained earnings progression and strengthening of liability franchise. We reiterate Buy with an unchanged TP of Rs. 1,650.