Buy IndusInd Bank; target Rs 550: KRChoksey
Brokerage house KRChoksey is bullish on IndusInd Bank and has recommended buy rating on the stock with a price target of Rs 550 in its July 11, 2013 research report.
July 20, 2013 / 14:53 IST
KRChoksey's research report on IndusInd Bank
"IndusInd Bank reported 1QFY14 PAT of Rs335 core (41.7 percent Y-o-Y & 8.9 percent Q-o-Q)), ahead of our estimates. The beat on bottom-line is largely driven by sharp jump in trading gains. NII grew strongly 40.4 percent Y-o-Y & 2.8 percent Q-o-Q aided by stable NIM and solid loan growth 27 percent y/y. Non interest income rose 47.6 percent Y-o-Y & 27.9 percent Qo- Q driven by fees (+30.7 percent y/y & 1.9 percent q/q, in line with our estimates), with contribution from transactional banking ,forex income and IB fees. Expenses grew 27.5 percent y/y, in line with quarterly trend. Asset quality has been fairly strong during the quarter with Net NPAs at 0.2 percent & PCR of 80 percent. Gross NPLs continue to hold steady at 1 percent of loans as provisions came in at Rs132crore against Rs82 crs in Q4FY13, up 61.3 percent Q-o-Q mainly on account of additional floating provision of Rs50 crore. Loan book growth continued to be strong at 27.3 percent Y-o-Y & 7.0 percent Q-o-Q led by strong growth in corporate loan book (30.2 percent y/y & 11.3 percent q/q) and steady retail loan growth at 24.5 percent Y-o-Y. CASA ratio increased 63bps Q-o-Q led by strong growth in saving deposit (up 54 percent Y-o-Y & 12.4 percent Q-o-Q)."Outlook & Recommendation: "Indusind Bank delivered another strong operating performance in the challenging quarter. We believe Expanding margins, strong fee income growth, higher trading gains, balance sheet growth delta, improving coverage ratio, consistent delivery of planning cycle 2.0 objectives have differentiated Indusind Bank in private sector banking space. We believe Indusind Bank continue to see NIMs to expand at lower pace on decline in cost of funds and relevantly stable consumer finance book’s yields. We expect Indusind Bank to deliver 27.3 percent CAGR in earnings over FY13-FY15, outperforming the sector earning growth. We downgrade our investment rating from “BUY” to “ACCUMULATE” on the stock with target price of Rs 550, potential upside 10.9 percent," says KRChoksey research report.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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