PremiumIndusInd Bank stock traded lower on Tuesday ahead of its December 2022 quarterly results. The bank will announce its Q3 results tomorrow. In Q3FY23, IndusInd Bank is expected to witness decent growth in loan books, while asset quality will continue to improve further. Also, margins are factored to be stable. Among key factors to monitor would be the cost of funds amidst rising deposit rates and the management outlook ahead.
At the time of writing, IndusInd Bank's stock traded at ₹1,222.60 apiece down by ₹16.60 or 1.34% on BSE. The stock ranged from intraday high and low of ₹1,238.35 apiece and ₹1,213.25 apiece respectively. Its market cap currently is over ₹94,802 crore.
IndusInd Bank has already announced its deposits and advances data for the third quarter of FY23. In Q3, the company's net advances stood at ₹2,71,966 crore up 19% YoY and 5% QoQ, while deposits came in at ₹3,25,491 crore higher by 14% YoY and 3% QoQ. Retail deposits and deposits from Small Business customers amounted to Rs1,37,968 crore as of 31 December 2022 as compared to ₹1,29,990 crore as of 30 September 2022. CASA ratio narrowed by 42% in Q3FY23 versus 42.2% in Q3FY22 and 42.4% in Q2FY23.
For IndusInd Bank, Kotak Institutional Equities expects a weak operating profit growth (~5% yoy) led by lower contributions from treasury and operating costs growth higher led by a recovery in the business. Loan growth is at 19% yoy (solid recovery) while NIM (reported) is likely to be stable at 4%. Non-interest income would be subdued due to lower treasury income. Deposit growth at ~14% yoy is showing stable trends. It has factored RoE at ~15% this quarter.
Kotak also expects provisions to keep declining led by lower slippages and better asset quality trends. Both the MFI and vehicle finance portfolios are showing improving trends. Also, Kotak said, they are building slippages of ~2.3% ( ₹15 billion).
Among key focus areas would be the cost of funds given the sharp rise in raising deposits.
Meanwhile, Prabhudas Lilladher expects IndusInd Bank's earnings to be driven by decent loan growth of 16% YoY. It expects margins to be stable sequentially at 4.70%. With asset quality improving, the brokerage expects provisions to remain range bound.
Further, BNP Paribas in its note on the bank said, "Price-to-book multiple-based TP. Macro risks of the inflation-interest rate-growth dynamic remain key downside risks. Niche segments such as MFI, and CV/CE financing remain vulnerable to a rate hike driven economic slowdown and are walking into the crisis already under some cyclical duress. The key upside risk to our call is a full cyclical reversal and high growth sentiment in its core CV, MFI businesses that may accelerate earnings momentum."
According to ICICI Direct, NII is expected to grow 17.5% YoY, 3.6% QoQ to ₹4,456 crore while non-interest income is expected to grow 12% YoY at ₹2,101 crore. CI ratio is likely to be largely stable at ~44%. Subsequently, PAT may grow 64.9% YoY (7.2% QoQ) at ₹1,915 crore. Overall asset quality trend is expected to improve sequentially with GNPA at ~2% levels. Management outlook on growth would be key monitorable.
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