Buy IndusInd Bank; target of Rs 1700: Motilal Oswal

Motilal Oswal's research report on IndusInd Bank

IndusInd Bank (IIB) reported an in-line 2QFY24 performance. PAT was up 22% YoY at INR22b, aided by healthy NII growth (up 18% YoY) and lower provisions (down 15% YoY). Loan growth was healthy at 21% YoY to INR3.2t, with healthy traction in both Corporate and Consumer Finance books. Fresh slippages rose ~7% QoQ to INR14.7b, driven by a sharp rise in slippages in the corporate book to INR2.1b from INR0.4b in 1QFY24. GNPA/NNPA ratios remained stable at 1.93%/0.57%. The restructured book declined 12bp QoQ to 0.54%.

Outlook

We estimate IIB to deliver a ~23% earnings CAGR over FY24-26 and RoA/RoE of 2.0%/16.8% by FY25. We reiterate our BUY rating with a TP of INR1,700.