Buy IndusInd Bank; target of Rs 2075: Prabhudas Lilladher

Prabhudas Lilladher's research report on IndusInd Bank

IIBs reported earnings were broadly in-line with estimates with PAT at Rs10.3bn (PLe:10.2bn) and were led by slightly better other income and lower opex growth. NII growth of 20% YoY was slightly below expectations despite strong loan growth of 29.4% YoY as margins declined by 5bps QoQ to 3.92%. Yields will catch up mainly on the corporate book as MCLR increase effect catches up fully.

Outlook

We continue to believe IIB remain on track to achieve scale, steady CASA ratio, improvement in margins led by equal mix of corporate & consumer finance and steady asset quality, which should lead it back to 19-20% ROEs by FY20 and BFIL merger should help expedite the same. Hence we retain our BUY stance with TP of Rs2,075 based on 3.9x Mar-20 P/ABV