Motilal Oswal 's research report on IndusInd Bank
IndusInd Bank (IIB) reported a stable quarter as lower fee income and higher provisions (credit cost of 4.5% annualized) impacted earnings. On the other hand, lower opex and modest improvement in margins were a surprise. PCR improved to 66.6%, while the bank increased the COVID-19 provisioning buffer to INR12b. Loan growth remains under pressure, while deposit growth is showing signs of stabilizing. The moratorium book has also declined to ~16% at Jun’20-end from ~50% as of Apr’20-end; the bank suggested GNPA / credit cost impact of 92b/65bp due to COVID-19. We largely maintain our estimates as softness in other income is compensated by lower opex and provisions. Maintain Buy.
We have factored the announced capital raise in our estimates. Maintain Buy, with TP of INR700 (1.2x FY22 ABV).
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