Buy Indusind Bank; target of Rs 1050: ICICIdirect

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26 Aug, 2025 12:21

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ICICIdirect.com's reserach report on Indusind BankThe asset quality of IIB has fared well over the years. GNPA and NNPA ratios have declined from 3.1% and 2.3% in FY08 to 1% and 0.3% by FY11, respectively. They have remained at these levels currently. The steady performance is owing to IIB’s peculiar loan mix. The CB book mainly consists of loans towards working capital, which is less risky than term loans. Further, the CB book is well diversified with exposure to stressed sectors such as iron & steel, commercial real estate (CRE), power, etc. at lower levels of ~1-2%. Also, the asset quality has been manageable in the CF book, which constitutes the balance half.IIB continued to deliver a strong performance relative to peers despite a weak economy in the past two or three years. This is clearly reflected in its continuous re-rating in multiple. Normalised return ratios of ~18% RoE and 2% RoA provide comfort. We factor in the recent capital raising (~Rs 5100 crore), which is book value accretive by ~22% already factored by us, while the RoE is expected to decline ~350 bps to 16% for FY17E. We have tweaked our estimates as we factored in Rs 4100 crore acquired gems & jewellery portfolio, which led to a marginal increase of Rs 4 per share in FY17E ABV to Rs 337. Accordingly, our target price is revised to Rs 1050 (|1030 earlier) valuing at 3.1x FY17E ABV. Maintain BUY.For all recommendations, click here 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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