Dolat Capital's research report on IndusInd Bank
IIB reported a healthy NII growth at 16% YoY. However, PPoP growth at 10% YoY was supported by high treasury gains, excluding which core PPoP de-grew by 10% YoY. Total COVID related provisions stood at 60 bps of advances or Rs12bn. Moratorium by value was at 16% (14% excluding MFI) for the bank, of which 90% is secured. Moratorium levels were at 50% in May-end. Management’s conservative stance on growth and provisioning along with additional disclosures on ‘BBB and below’ (at over 30%) book provide some comfort. However, building a more sustainable franchise will have its medium term challenges. We build in ~300 bps of credit costs against management guidance of 185-200 bps.
Outlook
We maintain our SELL recommendation on IIB with a TP of Rs460 based on 0.9x FY22E P/ABV.
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