IndusInd Bank posted modest results in Q4FY21 on the business growth front while asset quality showed a sequential improvement. On the operating front, numbers were in line with our estimates. Net interest income increased 9.4% YoY and 3.8% QoQ to Rs. 3535 crore with stable NIMs at 4.1% QoQ. Margins remained stable as excess liquidity had a drag on benefit of reduction in cost of funds. Other income was up 4.4% QoQ, driven by 9% QoQ uptick in core fee income. In turn, this was boosted by 24% QoQ rise in retail fees. Cost-to-income increased 56 bps QoQ to 42.4% as opex increased due to revival in business activity. The bank during the quarter made provisions worth Rs. 1866 crore and was flattish QoQ. Net profit came in at Rs. 876 crore and was in line with our estimates.
Valuation & Outlook
The management is geared to pedal growth ahead with focus on certain segments. Improvement in capitalisation levels post warrant subscription by management to aid strength for balance sheet expansion. We expect business momentum to pick up from here on with corporate re-alignment largely achieved. Asset quality is expected to improve in FY22E, though impact of second wave needs to be assessed. The bank has conservatively provided its unsecured, MFI loans and has ample provisions on books, which should reduce earnings volatility. Hence, we upgrade our target price at Rs. 1100 (earlier Rs. 1050), valuing the stock at ~1.9x FY23E ABV. We maintain BUY recommendation.
For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_IndusInd_Q4FY21.pdf
Shares of INDUSIND BANK LTD. was last trading in BSE at Rs.914 as compared to the previous close of Rs. 934.95. The total number of shares traded during the day was 723239 in over 20699 trades.
The stock hit an intraday high of Rs. 967.8 and intraday low of 900. The net turnover during the day was Rs. 670616679.