Prabhudas Lilladher's research report on IndusInd Bank
IIB’s PAT of Rs4.6bn (PLe: Rs4.8bn) was marginally below estimates on higher than expected provisions mainly towards COVID related and enhancing PCR to 66%. As first time disclosures +50% of loan book was under moratorium 1.0 with retail being high at 75% which has come down to 16% in the extended moratorium upto Jun’20 and 19% in retail, while corporate book was at 9%. Bank has guided from their second stress test it is likely to see additionally 90bps higher than stress test 1.0 and 60bps credit cost incrementally. Overall collection in MFI has reached to 86% and other business slightly lower but continues to improve in July. We have slightly increased credit cost assumptions to +200bps with 300bps slippages in FY21/FY22.
Although, good capital levels, better NIMs/PPOP to absorb some of the provisions gives us some comfort. We maintain BUY with revised TP of Rs680 (from Rs720) based on 1.1x Mar-22 ABV.
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