Maintain 'buy' on IndusInd Bank - TP Rs.490 - Geojit BNP Paribas Financial Services

- Buy rating on IndusInd Bank is retained with a target price of Rs.490. The stock is currently traded in the range of Rs.450.

- 4QFY13 net profit at Rs.310 crore is 37.6% up yoy and 15% up qoq, driven by healthy core earnings.

- NII at 660 crore is increased 42.4% yoy and 14.4% qoq led by NIM expansion of 24 bps qoq and advances growth of 26.4% yoy.

- Cost of funds declined 48 bps qoq largely due to capital raising, which led to 24 bps expansion in NIM to 3.7%.

- Robust growth of 31% yoy and 5% qoq in fee income led to 26% yoy growth in other income despite 35% fall in trading gains.

- CFD (consumer finance division) asset quality continued to hold up well and recoveries remained strong.

- CCB (corporate, commercial banking division) slippage was 0.1% and this is still under control.

- Savings deposits (SA) continued to grow at a healthy pace of 14.1% qoq. Current deposits (CA) grew at 4.1% qoq. The incremental CASA ratio remained at 40% for the last two quarters.

- Traction in CASA continued with 125 - 130 new branches expected in FY14.

- The cost to income ratio declined to 47.2%. However, this is expected to pick up as focus is now on brand building and visibility.

- The outlook on IndusInd Bank remains positive because of its strong execution record, stable margins and earnings visibility.

- Maintain 'buy' rating with a target price of Rs.490.

Source : Equity Bulls

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