IndusInd Bank share price climbed over 1 per cent on Monday to hit an intraday high of Rs 998.95 a piece. The stock has jumped 8.75 per cent so far this year and Edelweiss Broking sees a further 11 per cent upside on the stock given the fact that the lender has a robust technology platform supporting multi-channel delivery capabilities, and has been steadily delivering on core performance. Currently, IndusInd Bank shares are trading 20 per cent down from its 52-week high of Rs 1,241 apiece on BSE. The brokerage has set a target price at Rs 1,100 per share.
Note that IndusInd Bank commenced its operations in 1994 and had transformational management changes in 2008. The lender currently has 1,910 branches, and 2,700 plus ATMs spread across geographic locations of the country. Ever since the management change, the bank has successfully completed three phases of planning cycle and is currently undergoing fourth phase of planning cycle.
“The market has consistently rewarded the IndusInd Bank for its delivery on improvement in profitability metrics — ROA, ROE. Currently, the bank caters to the needs of both consumer and corporate customers. It has a robust technology platform supporting multi-channel delivery capabilities,” said Edelweiss Broking in its fundamental research report where it named IndusInd Bank as the stock pick of the week.
Robust Growth, Loan book getting granular:
IndusInd Bank reported robust business growth numbers for Q4FY22, where net Advances grew by 13% on-year and deposits grew by 15%. CASA ratio improved by around 100 bps on-year to 42.8%. This has been the highest ever growth rate reported by the bank in the last 8 quarters. Growth is gaining traction across segments (exMFI and MHCV). The bank’s loan book is also getting more granular. At present, IIB’s retail to wholesale mix is 54:46. According to the Broking report, retail is getting balanced between vehicle finance, non-vehicle finance and micro finance.
Asset Quality improving:
Apart from robust growth and loan book getting granular, IndusInd Bank;s asset quality has also been improving sequentially. As of Q3FY22, GNPA stood at 2.48% compared to 2.77% in Q2FY22 and net NPA at 0.70% vis-à-vis 0.80% in Q2FY22. “We see it improving further,” Edelweiss Broking said. Bank’s management has also highlighted that collection efficiency is getting better and normalising much ahead of estimates. “While a conclusive asset quality prognosis is still a couple of quarters away, the proactive provisions done by the company make the balance sheet more resilient,” it added.
Additionally, IndusInd Bank has been steadily delivering on core performance. Besides, building on its provision buffer lends comfort. However, the key disappointment of late – on governance as well as performance– has been at BhaFin. “While an internal report has negated larger concerns, external report validation remains crucial,” the report noted.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. Financial Express Online does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)
