Prabhudas Lilladher's research report on IndusInd Bank
IIB saw a mixed quarter; while NIM at 4.84% was 11bps ahead of PLe, asset quality was a miss due to higher slippages and buffer provisions were further utilized. Deposit franchise continues to improve as RTD share enhanced by 240bps YoY to 44.8%. To fund existing run-rate of asset growth, deposit accretion should scale up to 16-17% YoY (~14% over FY22-24E), given bank would not like to surpass an LDR of 90%. With banking system witnessing liquidity squeeze, either loan growth for IIB will have to taper down or bank would resort to wholesale funding, which may affect margins. Hence despite we factoring a 17% loan CAGR over FY24-26E and stable NIM, there are downside risks to our estimates. While IIB has guided to increase provision buffer by Rs3bn in near term, it again utilized Rs2.2bn in the quarter; we would prefer a higher provision buffer.
Outlook
Maintaining multiple at 1.8x, our TP increases to Rs1,740 from Rs1620 as we roll forward to Mar’26. Retain BUY.
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