Arihant Capital has given Accumulate recommendation for IndusInd Bank with a target price of Rs. 1322 in its research report issued on Oct 28, 2021
Arihant Capital’s research report on IndusInd Bank
IndusInd Bank (IIB) has reported decent performance during Q2FY22 with strong profit growth of 72% YoY to INR 1,114 cr vs. our estimate of INR 1,102 cr. Profit growth for the quarter was higher due to 13% YoY/8% QoQ decline in provisions. With the pick in business momentum and opening up of economy, loan growth of the bank has picked up. Advances of the bank increased by 10% YoY as compared to 6% YoY growth in the previous quarter led by strong growth in Corporate portfolio. NII for the quarter grew by 12% YoY/3% QoQ to INR 3,658 cr was marginally ahead of our estimate of INR 3,658 cr. Operating profit of the bank increased by 12% YoY/1% QoQ to INR 3,174 cr vs our estimate of INR 3,101 cr. Contingent provision of the bank has increased from INR 2,050 cr (1% of loans) to INR 3,178 cr (1.4% of loans) as bank has prudently provided for its telecom exposure. Total loan related provision of the bank increased from 3.6% to 3.9% of total loans. Headline NPA ratio of the bank improved with GNPA/NNPA improvement of 11bps/4bps QoQ at 2.8%/0.8%. Restructuring pool has increased from 2.7% to 3.6% of loans on sequential basis.
We roll forward our estimates to FY24E and maintain our ‘Accumulate’ rating on the stock with a revised TP of INR 1,322 (earlier INR 1,095), based on 1.7x FY24E ABV.