Arihant Capital has given Accumulate recommendation for IndusInd Bank with a target price of Rs. 1236 in its research report issued on May 02, 2022

Arihant Capital’s research report on IndusInd Bank

IndusInd Bank (IIB) has posted decent performance during Q4FY22 with strong profit growth of 55% YoY/17% QoQ to INR 1,361 cr as compared to our estimate of INR 1,487 cr as provisions came off lower. Loan growth of the bank accelerating gradually and it has reported advances growth of 12.4% YoY/4.6% QoQ led by MFI, Business banking, small business loans and also corporate loan growth. NII for the quarter grew by 13% YoY/5% QoQ to INR 3,985 cr was ahead of our estimate of INR 3,887 cr. NIM of the bank improved by 10bps QoQ at 4.2% driven by 6bps decline in cost of deposits. Operating profit for the quarter grew by 9% YoY/4% QoQ to INR 3,329 cr vs. our estimate of INR 3,412 cr. Bank continue to holds INR 3,328 cr (140 bps of loans) of contingent provisions. IIB’s GNPA ratio declined by 21bps QoQ at 2.3% as slippages declined to INR 2,088 cr (vs. INR 2,598 cr in Q3FY22). Restructuring pool of the bank have come off from 3.3% to 2.6% QoQ due to repayment.

Outlook

We upgrade our rating on the stock to Buy from Accumulate with a revised target price of INR 1,236, based on 1.6x FY24E ABV.

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