Jan 23, 2018 12:01 PM IST | Source:

Buy IndusInd Bank; target of Rs 2076: Motilal Oswal

Motilal Oswal is bullish on IndusInd Bank has recommended buy rating on the stock with a target price of Rs 2076 in its research report dated January 11, 2018.

Broker Research @moneycontrolcom
  • bselive
  • nselive
Todays L/H

Motilal Oswal's research report on IndusInd Bank

IndusInd Bank's (IIB) 3QFY18 PAT grew 25% YoY (in-line) to INR9.4b. NII grew 20% YoY, led by robust advances growth of 25% YoY, even as calculated NIM shrunk 15bp YoY (reported NIM was flat YoY at 3.99%). Total income grew 18.7% YoY due to relatively low other income growth, as treasury gains were muted with increasing yields. However, controlled opex growth of 15% YoY (CI ratio declined 150bp YoY to 46%) led to PPoP growth of 2%/22% QoQ/YoY. Robust advances growth (25% YoY) was driven by 26% YoY corporate book growth; retail book grew 24% YoY, led by healthy growth in tractors (+42% YoY), credit cards (+55% YoY) and equipment finance (+29% YoY). Retail book stood at 41.3% of advances. GNPA/NNPA increased 11%/10% QoQ to INR15b/5.9b; however, in percentage terms, GNPA/NNPA increased 8bp/2bp QoQ to 1.16%/0.46%, as the bank utilized INR700m of floating provisions created in 1QFY18 to improve PCR to 60.5%. Slippages moderated to 1.6% (annualized) from 2% in the previous quarter.  Other highlights: (1) Robust CASA accretion continued, with 68% SA growth and 42% CASA growth (CASA ratio at 42.9%). (2) CET1/Tier 1 ratio stood at 14.07%/15.83%. (3) The bank is yet to receive FY17 divergence numbers from the RBI, as the audit has been completed at the end of Dec '17.


Valuation and view: IIB's key focus is to scale up on its retail operations, led by a higher share of non-vehicle retail loans by FY20. The bank is targeting 25-30% loan growth, driven by continued branch expansion (by 800) and strong customer acquisition (+2x to 20m). A merger with BHAFIN will strengthen the bank's liability profile and further boost return ratios. Maintain Buy with a revised TP of INR2,076 (4.0x Dec'19 BV v/s earlier TP of INR2,000 based on 4.0x Sep’19E BV).

For all recommendations report, click here

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on are their own, and not that of the website or its management. advises users to check with certified experts before taking any investment decisions.

Follow us on
Available On