IndusInd Bank share price rose more than 15 percent on April 28 despite company has reported fall in March quarter net profit.
The bank reported a March quarter profit at Rs 301.84 crore, down 76.8 percent compared to the previous quarter's net at Rs 1,300.2 crore, impacted by higher provisions and lower other income, but lower tax (down 77 percent QoQ) limited the decline.
Numbers are non-comparable year-on-year as Bharat Financial Inclusion was merged in July last year.
Net interest income for the quarter grew by 5.1 percent sequentially to Rs 3,231.2 crore.
Net interest margin for Q4FY20 improved to 4.25 percent, from 4.15 percent in the previous quarter and 3.59 percent in the corresponding period last year.
The brokerage house maintained a buy rating with a revised target price of Rs 720 (from Rs 786) based on 1.2x Mar-22 ABV as risk-adjusted margins can still manage to be positive while new management could lead direction toward granular and stronger b/s.
Broking house maintained reduce recommendation with a target price of Rs 410 based on 0.8x FY22E P/ABV.
Muted loan growth at 11 percent YoY and decline in corporate book impacted core fee income (down 8 percent QoQ). While GNPAs were 30 bps higher QoQ to 2.45 percent and PCR strengthened to 63 percent (from 53 percent in Q3FY20), it added.
The pre-provision profit held up better than the expected. The NIMs was up 15 bps QoQ, even as loan growth slowed sharply.
The profit was down 80 percent QoQ as bank stepped up provision cover and slippages elevated led by a few large accounts.
The company looking to increase share of retail assets & liabilities.
Credit Suisse expects FY21 growth to be sub-10 percent and maintained an underperform rating on the stock with a target of Rs 430 per share
The Q4 numbers were in-line with its estimate on core PPoP, however, the higher provisions led to decreased profitability.
The bank has highlighted steady deposits in April & potential credit cost of 180 bps.
It expect a tough FY21 and keep estimates largely unchanged with overweight call and target of Rs 525.
The pressure on asset quality from MFI/stressed commercial loans may persist, however, the bank regaining some business in wholesale deposits, is positive.
The company seems committed to granularise book & willing to slow growth. It has reiterated its buy call with a target of Rs 520.
The research house maintained a buy call and raised the target to Rs 610 from Rs 595.
The profit was above expectations and driven by better operational performance.
CLSA expects a rebound in earnings from FY22 and lowered the credit costs assumptions by 20 bps For FY21-22.IndusInd Bank ended at Rs 468.90, up Rs 61.55, or 15.11 percent on the BSE.