LKP Research's research report on IndusInd Bank
IndusInd Bank (IIB) reported a subdued quarterly performance, evidenced by profit degrowth and deterioration in asset quality due to stress in the unsecured loan portfolio. However, the advances and deposit growth were healthy, primarily led by vehicle loans and term deposits, respectively. NIM contracted sharply amid the rising cost and slower growth in higher yielding assets. Further, the bank has shown sequential improvements in profitability and lower provisions, indicating early signs of recovery. Additionally, its calibrated approach toward the microfinance book should help stabilize asset quality over time. Nevertheless, the ongoing stress in the unsecured portfolio is expected to continue, which could impact profitability in the near term.
Outlook
Hence, with a cautious outlook, we assign a NEUTRAL rating on the stock, based on 1.0x FY27E BVPS with a target price of ₹1,089.
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