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Last Updated : Jan 15, 2019 11:39 AM IST | Source: Moneycontrol.com

Buy IndusInd Bank; target of Rs 1935: HDFC Securities

HDFC Securities is bullish on IndusInd Bank has recommended buy rating on the stock with a target price of Rs 1935 in its research report dated January 10, 2019.

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HDFC Securities' research report on IndusInd Bank


IIB’s 3Q was characterized by robust business growth and healthy operating performance ( PPOP up 27/6% YoY/QoQ). NIMs were sequentially stable at ~3.8% (down ~16bps). Driven by treasury gains (2x QoQ), other income grew ~12%. CASA remained sequentially stable at ~44%, w/w SA dipped ~2% QoQ. Fees (% of loans) dipped by 10bps QoQ to 3%. While overall asset quality deteriorated sequentially, (GNPAs at 1.13%, ~Rs 19.7bn, +11% QoQ) the exposure to IL&FS remained std (Rs 30bn). Even as IIB additionally provided ~Rs 2.55bn (total provisions ~Rs 6bn incl. floating provisions), it will have to incur further provisions of at least ~Rs 4bn toward the holdco exposure.


Outlook


Our constructive thesis on IIB remains unaltered as it continues to display strong growth and operating performance, which we expect will continue. While asset quality will be adversely impacted by its exposure to IL&FS, in the near term; we expect IIB to be back on track to achieve RoAAs of 1.62% by FY21E post its acquisition of BAFIN. Maintain BUY with a TP of Rs 1,935 (3.5x Dec-20 ABV of Rs 553).


For all recommendations report, click here


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First Published on Jan 11, 2019 03:52 pm
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