Reduce IndusInd Bank; target of Rs 1025: HDFC Securities

HDFC Securities recommended reduce rating on IndusInd Bank with a target price of Rs 1025 in its research report dated April 24, 2023.

Broker Research

April 25, 2023 / 14:41 IST

Reduce

26 Aug, 2025 12:21

Volume

Todays L/H

HDFC Securities' research report on IndusInd Bank

IndusInd Bank (IIB) reported its highest-ever quarterly earnings, mainly led by strong loan growth (+21% YoY), stable margins and sustained traction in fee income. However, elevated gross slippages at 2.4%, primarily from MFI (~13%) and corporate book (~11%) in addition to higher credit costs (142bps) suggest that IIB is having to operate at the higher end of the risk spectrum, especially given its historically sub-par / non-granular deposit profile. Over its next threeyear planning cycle, IIB is focusing on achieving deposit granularity through its branch expansion strategy. However, we believe that IIB faces structural challenges in a deposit-constrained environment, translating into sub-optimal operating leverage from continued investments on both sides of the balance sheet.

Outlook

We trim our FY24E/FY25E estimates to factor in elevated credit costs, and higher opex, offset by NIM reflation (higher mix of the fixed-rate portfolio). We maintain REDUCE with a revised TP of INR1,025 (1.1x Mar-25 ABVPS).

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