IndusInd Bank Ltd. share price target

Q3FY20 GDP: Growth to recover in FY21. IIB: Leadership overhang recedes

As per a press release on the exchanges, IndusInd Bank (IIB) has received RBI approval to appoint Sumant Kathpalia as MD & CEO for three years beginning 24 March.

Indusind bank has emerged as one of the fastest growing banks in the banking sector in India.The products & services offered by the company includes personal banking offers a wide range of products & services like deposits,loans,investment,insurance,forex services ,demat servoces ,online services & wealth management services.NRI banking offers money transfer,investment products such as international deposits,mutual funds,online share trading etc.The bank also offers property solutions & insurance loans.Business banking caters to SMEs, retail,NRI & other...

IndusInd Bank has posted net profit to Rs 1300.20 crore for the quarter ended December 2019 (Q3FY2020), which has been impacted to higher credit cost and elevated fresh slippages of loans. The figures for Q3FY2020 and 9MFY2020 include the figures of Bharat Financial Inclusion on account of completion of merger. Stable asset quality: Bank has maintained stable asset quality in Q3FY2020. However, the...

IndusInd's credit growth continues to decline to 20% vs 21% on sequential basis and reported higher slippages from corporate portfolio (up 76% QoQ). Deposits growth remains strong at 23% YoY. NII grew by 34% YoY with a 19% YoY growth in its core fee income. Consolidated PAT grew by 19% YoY; while adjusted for accelerated provisions PAT grew by 52% YoY. GNPA remain stable at 2.18% vs 2.19%; however NNPA declined to 1.05% vs 1.12% due to accelerated provisioning. Bank's aggregate exposure net of provisions to Zee/ADAG/DHFL declined to 0.47% vs 1.1% (QoQ) of loan book. We largely maintain our estimates for FY21. We retain our BUY rating with a TP of Rs.1,720 (Rs1,575 earlier) valuing the stock at 3.0x vs. 2.75x earlier (18%...

Credit growth was at ~20% YoY (5.2% QoQ) to | 2.07 lakh crore led by higher growth in corporate book (6.2% QoQ) compared to consumer book (4.4% QoQ). Slower growth within the consumer book is attributable to auto slowdown. Deposit growth continued to remain healthy at ~23% YoY to | 2.17 lakh crore led by healthy traction of 12% QoQ in savings deposits....

IndusInd Bank reported steady December quarter with most parameters on expeceted lines except for fresh slippages which marred the overall performance. Loan book growth moderated to 20% yoy for second consecutive quarter, however, deposit saw continue surge in its growth at 23% yoy. Core operating performance was robust with preprovisioning operating profit rising by 30% yoy to `2,758 Cr aided by strong NII growth of 34% yoy & modest cost to income ratio of ~43%. Its asset quality for the quarter was...

Elevated slippages and consequent provisions at IIB dented IIB's RoAAs over FY19 and will continue to do so over FY20E. However, we see these as transient and expect RoAAs to climb to 1.90/1.97% by FY21/22E (one of the best amongst its peers) even as we build elevated LLPs. Our constructive stance on the stock remains unchanged in spite of the stress that has played out so far, and draws on IIB's inherent strengths and asset quality improvement beyond FY20E. A smooth leadership transition will help with current asset quality issues. IIBs 3QFY20 net earnings were below estimates due to higher provisions while the banks operating performance was slightly ahead of estimates (led by higher NIMs and controlled opex). Loan growth (YoY) remained slow, and even as GNPAs inched up, PCR increased. Maintain BUY with a TP of Rs 1,990 (3.0x Dec-21E ABV of Rs 663).

IndusInd Bank's (IIB) Q3FY20 PAT grew 33% YoY to Rs 13bn, largely due to 34% YoY growth in NII and 5bps QoQ NIM expansion to 4.15%.

While the operating performance was healthy (NII, margins, business growth, particularly deposits/PPoP), higher slippages remain a drag and also a reason for investor caution in a period of management transition. We cut our EPS estimate for FY20/21 by 6%/3%, primarily as we factor in our assumption of higher credit cost and slippages. Maintain PAT of INR13b (+33% YoY) came in lower than our estimate of INR15b owing to higher provisions of INR10.4b as the bank created accelerated provisions of INR2.5b. NII was up 34% YoY at INR30.7b (3% beat) as margins expanded 5bp QoQ to 4.2%. PPoP increased 30% YoY to INR27.6b (in-line). Loan growth moderated to 20% YoY, led by slowdown in the CV and corporate portfolios. Deposits were up 23% YoY, led by a 30% YoY increase in SA deposits (+12% QoQ). CASA mix thus improved by 100bp QoQ to 42.4%, despite a slight moderation in current account deposits.