Reduce IndusInd Bank; target of Rs 1140: HDFC Securities

HDFC Securities' research report on IndusInd Bank

IndusInd Bank (IIB) reported its highest-ever quarterly earnings, in line with estimates, predominantly led by strong loan growth (+21% YoY), stable margins and sustained traction in fee income. However, elevated gross slippages at 2%, primarily from MFI and the CV book in addition to higher credit costs (144bps), suggest that IIB continues to operate at the higher end of the risk spectrum, especially given its historically sub-par/non-granular deposit profile. Over its next three-year planning cycle, IIB is focusing on achieving deposit granularity through its branch expansion strategy. However, given the normalisation and substitution of surplus liquidity with high-yielding loans (loan-to-deposit ratio at 89%), our forecasts build in a deceleration in loan growth, trending below deposit growth, which is likely to be NIM-dilutive.

Outlook

We maintain REDUCE with a revised TP of INR 1,140 (1.3x Mar-25 ABVPS).

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