HDFC Securities' research report on IndusInd Bank
IIB has been a master in execution across planning cycles, despite weak macros. We derive confidence from the mgt’s ability to beat ambitious targets consistently across parameters. The bank is making all the right moves on either side of the B/S, to deliver best-in -class return ratios (1.8% over FY18-20E) for the foreseeable future.The 2Q numbers further vindicate our positive stance, given healthy all-round credit growth (+24%), robust fee growth (+23%), stable NIMs and controlled asset quality (stable G/NNPA QoQ). An exposure of merely ~Rs 3.9bn to a/cs in RBI’s second list, and conservative provisioning (65%) for the same provide additional comfort.
With falling interest rates and subsequent pressure on yields, IIB is amongst the better-placed banks, with a greater proportion of a high-yielding fixed rate book and additional headroom for reduction in CoF (tweak SA rates). Maintain BUY with a TP of Rs 1809 (3.75x Sept-19 ABV of Rs 482).