Dolat Capital Market has given Accumulate recommendation for IndusInd Bank with a target price of Rs. 1060 in its research report issued on Apr 30, 2021
Dolat Capital Market’s research report on IndusInd Bank
IIB’s operating metrics were in-line, with NII and PPoP growing by 9%/10% YoY respectively and largely stable NIM. NIM was adversely impacted by higher liquidity during Q4FY21 with 7% QoQ rise in deposits vs less than 3% growth in advances. Asset quality trends were mixed with healthy PCR at 75%, rise in standard provision buffers (ex of general provisions) by Rs6.3bn to 0.8% of advances or Rs17.5bn, and superior asset quality trends in the MFI book (slippages at 3% for FY21). However, restructuring at 4% for the vehicle book seems higher than peers. ~65% of total restructuring (2% of loans) were from the vehicle portfolio. Moreover, GNPA reduction of 30 bps QoQ to 2.67% was largely owing to high write-offs.
Tweaking estimates for FY22E/23E, we maintain our Accumulate rating with a TP of Rs1060 (from Rs940 earlier), valuing the bank at 1.6x FY23E ABV against a RoA/RoE of 1.6%/12.3% for FY23E. We factor in credit costs of 175 bps for FY22E against 272 bps in FY21.