Buy IndusInd Bank; target of Rs 1800: Prabhudas Lilladher

Prabhudas Lilladher's research report on IndusInd Bank

IIB's earnings saw strong beat with PAT of Rs14.3bn (PLe: Rs10.6bn) mainly due to lower provisions than expectations and better NII growth. Core IIB was slightly looked weaker on NII translated by slightly slower loan growth. Most metrics like CI & asset quality improved with stressed assets at 1.7% of loans & SMA-2 at 17bps of loans. Some merger synergies are yet to play out on funding costs, liabilities accretion & RWA efficiency while MFI & biz banking reclassification has improved balance of book towards consumer. Bank is well positioned with return ratios of 17-18% ROE although any re-rating will need clear visibility on asset quality.

Outlook

We maintain BUY with TP of Rs1,800 (unchanged) based on 2.9x FY21 ABV.