Buy IndusInd Bank; target of Rs 1860: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on IndusInd Bank

IndusInd Bank reported robust business traction of ~29% YoY in advances & deposits to Rs 186394 crore & Rs 194868 crore, respectively. Credit growth was driven by uninterrupted healthy growth of 30% YoY & 27% YoY in corporate & consumer finance book to Rs 113710 crore & Rs 72684 crore, respectively. Within corporate book mid & small corporate book led the growth while within consumer finance book retail finance & vehicle finance aided growth. On the deposit front strong growth of ~29% YoY was aided by both CASA & term deposit with 26% YoY & 30.5% YoY, respectively.

Outlook

With a hangover of exposure to IL&FS over & lower residual stress currently from current loan book, the management’s focus has returned towards earnings. The management has guided for normalised credit cost of 60 bps for FY20 and with lower exposure to stressed group provides comfort. Superior growth, strong liability franchise, stable margins and steady credit costs may lead to PAT growth at 45.1% CAGR in FY19-21E. The merger with Bharat Financial (BFIL) is expected to get through during Q1FY20 & merger is expected to add ~Rs 8/ share to standalone BV while warrant issuance to promoter can add ~Rs 25/share. We maintain our BUY rating on the stock with an unchanged target price of Rs 1860. Incorporating FY21E. We value the stock at ~3.1x FY21E ABV. Lack of clarity over leadership succession needs to be watched.

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