HDFC Securities is bullish on IndusInd Bank has recommended buy rating on the stock with a target price of Rs 1971 in its research report dated July 10, 2018.
HDFC Securities' research report on IndusInd Bank
It was a quarter of reversion for IIB as slippages normalised (post the divergence in 4Q) and fee growth returned to normal levels (+20% YoY) after a multi-quarter low. The bank continued to deliver steadily on all other counts with robust loan growth (+28% YoY), strong CASA accretion (+37% YoY) and curtailed opex (up merely 12% YoY). Though NIMs were 5bps lower QoQ at 3.92%, they should rebound as re-pricing (post the recent hikes in MCLR) kicks in.Our constructive thesis on IIB is driven by the management’s consistency and ability of meeting (if not beating) defined targets. We believe IIB will continue to comfortably surpass system growth as PSBs cede market share and corporate tilted private banks grapple with asset quality. Clear focus on RoA accretion through any inorganic expansion will prevent reckless moves and create long term value.
The merger and integration of BFI will provide a fillip to already superior return ratios. Maintain BUY with a TP of Rs 1,971 (3.75x Mar-20 ABV of Rs 526).
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