IndusInd Bank Q3 profit jumps 68%; what should investors do now?

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Here is what brokerages have to say about stock and the company post December quarter earnings:

Morgan Stanley

Research house has kept ‘Overweight’ rating on the stock and raised the target price to Rs 1,525 per share.

According to Morgan Stanley, both core Pre-Provision Operating Profit (PPoP) and credit costs surprised positively in Q3, while negatives were further moderation in SA ratio & slower MFI growth pickup, reported CNBC-TV18.

Jefferies

Broking firm has maintained ‘Buy’ rating with a target at Rs 1,600 per share.

The profit was tad ahead of estimates, while NII growth of 18% was healthy & are encouraged to see slight rise in NIMs.

The slippages were tad higher in CV/CE & MFI loans, see these as blips that should normalise and retail deposit growth was healthy & better than select peers.

However, clarity on CEO extension will help re-rating, reported CNBC-TV18.

CLSA

Brokerage house has kept ‘Buy’ rating with a target at Rs 1,500 per share as the Q3 was largely in-line on core PPoP & PAT.

The NIM in-line with increased corporate book yields offsetting higher cost of funds and loan growth remained strong.

The risk reward is favourable and CEO extension is a key near-term monitorable, reported CNBC-TV18.

Credit Suisse

Research firm has maintained ‘Outperform’ rating on the stock with a target at Rs 1,430 per share.

The firm has cut FY23-25E EPS estimates by 2-3% on the back of higher opex and expect RoEs to improve to 16%, reported CNBC-TV18.

Citi

Research house has maintained ‘Buy’ rating on the stock with a target at Rs 1,430 per share.

According to research house the liability headwinds persist, while difficult to forecast FY24 NIM. However, company reported flat QoQ NIM, despite a rise in yields on advances & LDR.

The flat NIM largely due to a sharp rise in liability cost and weakness in CASA.

The pockets of weakness in consumer banking remain a concern, reported CNBC-TV18.

Prabhudas Lilladher

Brokerage house retain 'Buy' on the stock

It raise FY23E PAT by ~6% due to better revenues/lower provisions and increase Target Price to Rs 1,500 from Rs 1,450

The bank saw another good quarter with core PPoP at Rs 33.5bn led by slight beat on NII, fees and opex

The provisions were lower due to utilization of Rs 4.6 bn buffer provisions (now 80bps) while OTR pool decreased QoQ from 1.5% to 1.25%.

Brokerage house like the bank, although approval of MD&CEO term by RBI and RTD accretion remain key monitorable

Sharekhan

Brokerage firm maintain its 'Buy' rating on the stock with a revised Price Target of Rs 1,500

The near-term outlook looks stable to positive for the bank, except for cost of deposits

Retail book is showing a strong momentum, while the MFI business is expected to pick up.

Sharekhan expect credit costs to decline sharply over the next few quarters as restructured book is fully run down in the next two quarters, collection efficiency improves in MFI and near-term issues resolves in the vehicle loan segment.

Motilal Oswal

Broking house reiterate its 'Buy' rating with a Target Price of Rs 1,550.

The banks operating performance remains on track, led by healthy NII growth and controlled provisions

Asset quality remains steady, driven by lower slippages

The management is guiding for continued momentum in loan growth and is looking to end FY23 with a growth of 20%

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