Buy IndusInd Bank; target of Rs 1100: KRChoksey

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26 Aug, 2025 12:21

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KRChoksey's report on IndusInd Bank

Indusind Bank delivered strong core operating performance with PAT of Rs 525 crs (+24.7% Y-o-Y; +6.0% Q-o-Q), in line with our expectation. Key highlights: 1) NII grew 22.5% Y-o-Y & 6.0% Q-o-Q driven by 23.1% Y-o-Y growth in loan book and stable NIMs 2) Non-interest income depicted a healthy growth of 25.7% Y-o-Y driven by healthy fee income (+23.1% y/y; +5.3% q/q) and trading gains. Steady growth in loan processing fees, forex income, investment banking income and third party distribution fees have supported robust core fee income growth 3) Asset quality remained contained during the quarter as slippages were contained, while the bank sold loans worth Rs 21 crs to ARCs. Gross NPAs increased by 1.3% Q-o-Q while Net NPAs increased by 6.8% Q-o-Q. Provisions grew by 14.8% q/q due to accounting of losses on assets sold in the previous quarters 4) Loan book growth continued to be strong at 23.1% Y-o-Y & 5.0% Q-o-Q aided by a pickup retail book which grew at 5.6% Q-o-Q, while the corporate book continued to support by growing at 4.6% Q-o-Q 5) CASA ratio improved to 34.7% driven by healthy SB deposit growth (+8.3% q/q) aided by CA deposits (+6.2% q/q) 6) The management has indicated a pickup in CV cycle led by increasing demand from the MHCV segment 7) The bank successfully raised Rs. 4,328 crs through a QIP placement and would be issuing preference shared amounting to Rs 750 crs to promoters in the next quarter.

Outlook & Recommendation: "Indusind Bank has delivered another quarter of strong and consistent operating performance. Stable NIMs, healthy core fee income growth and contained asset quality are key highlights from the result. Improving loan book growth outlook aided by better growth in retail loans, falling funding costs & better loan book mix supporting NIM improvement and recovery in CV book and both in terms of growth & asset quality drive comfort in the stock. We expect Indusind Bank to deliver 25.0% CAGR in net earnings driven by 25.6% CAGR in assets and 12bps improvement in ROA over FY14-FY17. At Rs 922, the stock is trading at 2.6x FY17 adjusted book value and 17.5x FY17 net earnings. We hold a “BUY” rating on the stock with revised target price of Rs 1,100", says KRChoksey research report.

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