Hold IndusInd Bank; target of Rs 984: Emkay

Emkay Global Financial Services has recommended hold rating on IndusInd Bank (IIB) with a target price of Rs 984, in its research report dated April 16, 2015.

July 31, 2015 / 20:16 IST

26 Aug, 2025 12:21

Volume

Todays L/H

Emkay's report on IndusInd Bank (IIB)

IndusInd Bank (IIB) earnings of Rs5bn (25% yoy) was in-line with our estimate. Core revenue and operating profits growth were healthy at 22% yoy and 19% yoy respectively. This was driven by superior NIMs (3.7%), strong loan growth of 25% yoy and continued traction in fee income (+29% yoy, as a percentage of assets stood at 2.2%)

Slippages increased qoq to Rs4.5bn (annualized slippage ratio of 3.3%) primarily led by four corporate accounts. However, sale of loans to ARCs and write-offs led to 16% sequential decline in GNPLs. Restructured loan portfolio was stable qoq at 53bps

Capacity creation gathered pace, as bank added 74 branches in Q4FY15, taking cumulative addition in last one year to 199. Despite this, strong traction in revenue, kept cost to income ratio and cost to assets contained under 50% and 2.8% respectively. SA growth was strong at 30% yoy

"We expect earnings CAGR of 26% over FY15/17E and RoAs and RoEs of 1.9%+ and 20%+ respectively. Tier I capital is at 11.2%, and IIB may raise capital in FY16, however we have not factored it in our estimates. We are positive on operational performance of the bank, however, premium valuation of 3.5x FY17 BV captures it. Retain Hold (TP Rs 984)", says Emkay Global Financial Services research report.