Buy IndusInd Bank; target of Rs 1954: HDFC Securities

HDFC Securities is bullish on IndusInd Bank has recommended buy rating on the stock with a target price of Rs 1954 in its research report dated October 15, 2018.

Broker Research

October 18, 2018 / 15:21 IST

26 Aug, 2025 12:21

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HDFC Securities' research report on IndusInd Bank

Barring the optical blip in net earnings (hit by proactive provisions of Rs 2.75bn towards an Infra group), it was business as usual for IIB. Positives from the qtr are (1) Broad based loan growth of ~32%, even after sell downs, (2) Healthy SA accretion (+7% QoQ), (3) Controlled opex growth of a mere 11/1%, (4) Steady fee growth of ~20% and (5) Stable asset quality with lower slippages. NIMs dipped (3.84%, -8bps QoQ) for the 4th consecutive qtr, given the higher proportion of fixed rate book and relatively higher increase in CoF.

Outlook

However, given the bank’s exposure to a large infra group (downgraded by rating agencies) net earnings in FY19E will be dampened. While the return ratios will be impacted in the near term, we expect RoAAs to bounce back to 1.81% over FY19-21E. BFI merger and integration will provide further fillip to return ratios. Maintain BUY with a TP of Rs 1,954 (3.5x Sept-20 ABV of Rs 558).

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