Shares of private lender IndusInd Bank gained nearly four percent intraday on September 16, while the benchmark indices shed a percent each. The stock was fuelled by the re-appointment of Sumant Kathpalia as the MD and CEO of the bank for another three years.
The scrip was quoting Rs 1,247 apiece on the NSE at 11:50 am, while its peers HDFC Bank, ICICI Bank, Axis Bank were trading in the red.
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On September 15, after market hours, the bank informed exchanges: "The Board of Directors has considered and approved the re-appointment of Mr. Sumant Kathpalia as the Managing Director & CEO of the Bank, for a further period of three years, with effect from March 24, 2023 up to March 23, 2026."
This is subject to the approval of the Reserve Bank of lndia and shareholders of the bank, the lender added.
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Kathpalia was first given the top job in March 2020, right when the pandemic hit. Since, then he has successfully effected the bank's business turnaround.
“He created a new and robust organizational structure to place a greater focus on customer interaction, portfolio & risk management, and support new business direction. He spearheaded growth with marked improvement in key financial and business performance metrics” according to an exchange filing.
The bank’s gross non-performing assets (GNPA) and net non-performing assets (NNPA) have improved from 2.67 percent and 0.69 percent (for the quarter ended March 2021) to 2.27 percent and 0.64 percent (for the quarter ended March 2022).
Return on assets (RoA) has also improved from 1.03 percent to 1.28 percent in the same time period.
“After COVID-19, all banks were grappling with asset quality issues in retail/SME. In addition to this IndusInd had its own issues. But, Mr. Sumath Kathpalia managed to do a good job in turning this around. Earnings quality has improved over the last few quarters” said Gaurav Jani - Research Analyst, Prabhudas Lilladher.
The brokerage firm has a Buy call on the stock with a target price of Rs 1300.
“We continue to remain Overweight on banking space at large. Large banks will benefit from the credit upcycle and are expected to report better margins in the upcoming quarterly results” he added.
ICICI Direct also has a Buy call on IndusInd Bank with a target price of Rs 1330. “With focus on new growth engines, investment in retail franchise and gradual retaliation of liabilities, the bank is poised to pedal growth and report a healthy margin trajectory” the brokerage said.
Anand Rathi, too, has a Buy call on the stock with a target price of Rs 1300. They expect credit growth and profitability for the bank to be strong on account revived demand in MFI (micro finance institutions) and vehicle finance.
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