Hold IndusInd Bank; target of Rs 1060: ICICI Direct

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

 ICICI Direct's research report on IndusInd Bank PAT growth was in line at 25% YoY to | 620 crore led by better-thanexpectedNII (up 37% YoY) and other income growth• Above industry business growth continued with loans increasing 28.5% YoY to | 88419 crore. Deposit grew higher-than-expected at 25.4% YoY to | 93000 crore. Traction in CV financing improved further with 33% YoY growth to | 14101 crore• Consumer finance (CF) book growth at 29% YoY to | 34549 crore has been above corporate segment growth of 28% YoY to | 51870 crore. There was a sell down of | 2200 crore in the corporate book. The CF book may accelerate faster than corporate book, going ahead• The asset quality saw pressure but was manageable with GNPA ratio increasing 5 bps to 0.87% QoQ. Slippages were incrementally higher in the CF book but flat QoQ in the corporate book. The restructured book reduced from 0.58% of advances to 0.53% on Q4FY16. Sale to ARCs was | 40 crore Outlook and valuationIIB has in the past three or four years, traded at premium valuations as compared to its private sector counterparts, except HDFC Bank and Kotak Mahindra Bank. This is due to a sustained and structural improvement in earnings (up 3x in the last four years) and best in class return ratios with RoE of ~18-19% and RoA of 1.6% in the past four years.Further, the major factor on the back of which the stock got re-rated from time to time was that such a strong performance has been accomplished in a strained economic environment wherein the banking system has been plagued by declining growth and increasing deterioration in asset quality. IIB, owing to its ideal mix of the loan book (niche presence in vehicle finance), improving CASA franchise and lower exposure to stressed sectors was able to ring fence itself from major systemic concerns and deliver strong results.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 the continuous re-rating in its multiple. Normalised return ratios of ~18% RoE and 2% RoA provide comfort. We factor in the recent capital raising (~| 5100 crore), which is book value accretive by ~22%, while the RoE is expected to decline ~350 bps to 16%. PAT CAGR is seen at 26% to | 3638 crore by FY18E. We revise our target price higher to | 1060 from | 1000 earlier as we roll over to FY18E ABV of | 383 assigning the multiple of 2.8x. We advise investors to continue to HOLD the stock.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.