Maintain 'buy' on IndusInd Bank - TP Rs.375 - Geojit BNP Paribas Financial Services

- Buy rating has been maintained on IndusInd Bank with a target price of Rs.375 over one year.

- Reported net profit of Rs.236.3 crore for 1QFY13. Net profit increased 31.1% yoy.

- Net interest income (NII) increased 24.1% yoy to Rs.484.1 crore.

- NII was mainly driven by healthy advance growth of 31.2%.

- Net interest margin (NIM) declined 7 bps qoq to 3.22%.

- Cost of funds jumped 35bps as borrowing had been replaced by high cost term deposits.

- The loan mix changed in favor of CFD (consumer finance division) at 50.4% with 47.7% yoy growth when loan growth in the CCB (corporate and commercial banking business) is at 17.9%.

- CFD asset quality continues to hold up well with the slippage rate of just 0.5% and recoveries exceeding slippages.

- Savings account deposits continue to grow at a healthy pace of 9.5% qoq and current account deposits grew 8% qoq versus overall industry declines.

- Overall CASA ratio improved to 27.9% versus 27.3% in 4QFY12.

- Core fee income grew 45.7% yoy and was broadbased. This is without considering the unrecognized non-life insurance fees from Cholamandalam due to a dispute with IRDA.

- The outlook on IndusInd bank remains positive due to the strong execution track record of the current management.

- At the target price of Rs.375, the stock would trade at 2.8 times of expected adjusted book value for FY13.

Source : Equity Bulls

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