IndusInd Bank Ltd. share price target

Provisioning was at | 1964 crore, down 13% QoQ, of which Covid-19 related provisions were at | 933 crore, taking outstanding Covid-19 provisions to | 2155 crore. PCR was at 77% for Q2FY21 vs. 67% in Q1FY21. As of September 2020, the bank held specific provisions for NPAs amounting to | 2646 crore and | 70 crore floating provisions apart from Covid-19 provision, taking provisions at 132% of GNPA. Loan growth remained flattish at 2.1% YoY, 1.6% QoQ as the bank looks to rebalance its loan portfolio. Hence, the corporate book fell 4.7% YoY. The...

IndusInd's deposit growth continues, it reported 8% QoQ increase vs 5% QoQ (Q1FY21) led by higher interest rates on term deposits. However, management guided for decline in deposit rates from Q3FY21 which needs to be watch out for impact on deposit franchise. Bank reported Collection efficiency at 94.7% for September month and improved to 95.6% as on date. NII grew by 13% YoY led by improvement in margins; however non-interest income declined by 10% YoY (up 2% QoQ) due to lower retail disbursements. Consolidated PAT decline by 53% YoY due to higher provisions (up 166% YoY) including floating provisions of Rs.9.5bn on Covid-19. GNPA declined on proforma basis to 2.32% vs 2.53% QoQ; NNPA declined to 0.52% vs 0.86% QoQ as...

IndusInd Bank (IIB) reported a stable 2QFY21 even as the bank continued to make higher provisions. Fee income picked up sequentially while margins were impacted due to excess liquidity. Loan growth was muted while the traction in garnering deposits stood strong. PCR improved sharply to 76.7%. The bank increased COVID-19 provisioning buffer to INR21.5b. IIB reported collection efficiency of ~95% for Sep'20. The bank has guided for a restructuring book of low single digits. We increase our estimates slightly factoring in the higher NII and...

IIB reported a PAT of Rs6.63bn better than Q1FY20 but slightly lower than expectations (PLe: Rs8.5bn) as it continued to keep provisions on higher side related to COVID-19 (Rs9.5 bn). Few positives were (i) Deposits accretion was quite good with CASA growth of 8% QoQ (ii) PCR at 77% (pro-forma at 73%) and (iii) bank holds 118bps of loans as additional provisions (without standard assets). We get incremental comfort on improving collection efficiency with 94-95% in Sep and higher in Oct'20, though lagging in both MFI & some segments of VF. While, restructuring also is expected to be in...

IndusInd Bank's (IIB) Q2FY21 PAT at Rs 6.6bn (53% YoY) saw the impact of elevated provisions, as expected.

Indusind Bank has reported better than expected numbers in 2QFY21, as it gross slippages declined at 3.9bn v/s 15.4bn in 1QFY21. The bank has reported provision expenses 19.6bn v/s 22.6bn in the previous quarter. The bank has made additional COVID provision of 9.55bn with addition to 11.9bn made in the previous two quarters. The total COVID provisioning stood at 21.55bn. The total contingent provision (excluding PCR) stood at 1.7% of loan book. Total loan loss provisions (cumulative, COVID and contingent) stood 130% of GNPLs and 3% of book. The bank's collection efficiencies have improved significantly (~95% as on Oct-20) and one of the best among large private banks. The capital infusion (post money CET 1: 14.5%) would provide further cushion....

Valuation and Risks: Despite concerns over near-term asset quality risks and impact of high credit costs on earnings, we believe all negatives and concerns are adequately priced incurrently as the stock is trading at historically low valuations.

is better placed to combat COVID and build a granular portfolio with sustainable growth. Additionally capital raise (32.9bn in 1QFY21 & 25bn in 2QFY21) will further boost the balance sheet. The pointers which acknowledge our conviction being: 1) Contingent provisioning (COVID + standard + floating & others) stood 1.2% of net advances and total provisioning (including cumulative) is at 2.5% of book, 2) Moratorium at 16% of the book is likely to reduce further, 3)...

We recommend a BUY on Indusind Bank with a Target Price of Rs 585, an upside of 12% from CMP of Rs 521 and Stop Loss Rs 490.