Sharekhan has given Buy recommendation for IndusInd Bank with a target price of Rs. 1400 in its research report issued on Sep 27, 2022
Sharekhan’s research report on IndusInd Bank
We believe IndusInd Bank is coming out of a tough cycle and concerns about asset quality, liquidity amid COVID-19 pandemic for bank is fading away, as collection efficiencies (due to recovery in core portfolio CV/MFIs) and liquidity position (LCR ~124%) is improving over the past few quarters. Bank reported credit cost at 3.8%/3.0% during FY21-22, but accelerated provisions made in past few quarters (in turn maintaining healthy provisioning on stressed assets) and additional non-NPA provision buffer of 1.2% of loans will enable a sharp drop in credit cost and would drive strong earnings recovery. Its credit cost is expected to fall sharply to ~150 bps annually over FY23-25E. With a view to strengthen its liability franchise, bank has been improving the granularity of its deposit book. Retail deposits’ share rose from ~26% in FY2019 to ~41% in FY2022.
Outlook
At CMP, IIB trades at 1.6x and 1.4x its FY2023E/FY2024E BV. We maintain Buy with a revised TP of Rs. 1,400.