Sharekhan has given Buy recommendation for IndusInd Bank with a target price of Rs. 1150 in its research report issued on Mar 09, 2022

Sharekhan’s research report on IndusInd Bank

IndusInd Bank released the findings of external auditors on an independent review pertaining to microfinance advances by its subsidiary, Bharat Financial Inclusion Ltd. The review found that a technical glitch led to the disbursement of loans without client consent as a result of IT change management and process gap. The findings of the review are as per the management’s expectations. The impact of the lapses and the quantum of exposure is not material, thus ending a major overhang. We believe, that with the findings of the audit, worries relating to the ever-greening of loans in its subsidiary are unfounded and the bank is likely to witness a turnaround in earnings. Additionally, the bank is likely to make additional provisions of Rs. 13.5 crore in Q4FY22 as a result of the impact.

Outlook

The stock price has corrected by 30% from highs of Rs. 1,242 and is trading at a discount to its historical valuations as well as to its peers. The stock currently trades at 1.3x/ 1.2x its FY23E and FY24E book value, which is reasonable. We expect the bank’s valuation to expand from the current levels. Hence, we maintain a Buy with an unchanged PT of Rs. 1,340.

More Info

At 17:30 IndusInd Bank was quoting at Rs 904.15, up Rs 28.70, or 3.28 percent.

It has touched an intraday high of Rs 927.75 and an intraday low of Rs 890.40.

It was trading with volumes of 355,316 shares, compared to its thirty day average of 261,478 shares, an increase of 35.89 percent.

In the previous trading session, the share closed up 4.18 percent or Rs 35.15 at Rs 875.45.

The share touched its 52-week high Rs 1,241.85 and 52-week low Rs 811.10 on 28 October, 2021 and 19 April, 2021, respectively.

Currently, it is trading 27.19 percent below its 52-week high and 11.47 percent above its 52-week low.

Market capitalisation stands at Rs 70,040.16 crore.

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