Sharekhan has given Buy recommendation for IndusInd Bank with a target price of Rs. 1340 in its research report issued on Sep 07, 2021
Sharekhan’s research report on IndusInd Bank
IndusInd Bank reported mixed set of results with improving trend on the liability side (healthy deposit mobilization, reducing cost of funds etc) while the stress on the asset side persists with sharp spike in slippages at 5.4% of loan book and gross NPA rose by 21 bps qoq to 2.9% during Q1. Bulk of the elevated slippages are related to retail/SME loan book on account of the second wave of pandemic. Management indicated that the worst in NPA addition is behind, and normalization should begin in H2 of this year. Bank has healthy provision cover of 72% with covid provision buffer at 1% of loans to address any further stress on asset side. The capital adequacy at 17.6% (Tier-I capital at 16.9%) is comfortable and the bank aspires for 16-18% growth in advances over the medium term.
We retain our Buy rating on the stock with unchanged price target of Rs. 1340, valuing the bank at 1.97x FY23 book value.