Prabhudas Lilladher's research report on IndusInd Bank
IIB’s earnings of Rs8.7bn missed estimates (PLe: Rs9.6bn) partly on slightly weaker income and partly on continued provisions. Slippages were slightly higher led from corporate and invoked restructuring led to upgrades as well. Retail slippages though were lower sequentially has been still on higher side, continued from VF, MFI, unsecured. Restructuring outcome has been slightly than anticipated (2% v/s 1.8% expected) as second wave has increased retail/SME borrowers to opt for restructuring. With much better PCR of 74% v/s 43% in FY19 and 80bps (Rs16.0bn) of contingent provisions cushion balance sheet, while core segments are seeing better collections efficiency & improving growth prospects.
Outlook
We expect loan growth will continue to be slower at 8-10% in FY22 as bank continues to re-calibrate its assets but improve ahead, while deposits side it is demonstrated strong comeback. We retain BUY with TP of Rs1,195 based on 1.7x FY23E ABV.
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