IndusInd Bank Q2FY18 Result Update - Rating - HOLD - Arihant Capital Markets

Strong CASA & Loan Growth

IndusInd Bank (IIB), yet again, delivered a top quartile performance across parameters. Net profit grew by 25% YoY and stood at Rs 880 crs. Loan book grew at 24% YoY. The ratio of corporate to consumer loans stood at 60:40.

Healthy business growth:

Advances recorded a steady growth of 24% YoY , while deposits grew by 26% YoY. Consumer finance growth stood at 22% YoY & 5% QoQ and corporate loan book grew at 26% YoY & 6% QoQ. On the deposits front, the CASA grew above industry at 46% YoY and stood at Rs 59,775 cr. In the current quarter bank added 40 branches and 56 ATM's taking the total no. of branches to 1250 and total number of ATMs to 2146.

Strong earnings growth:

NII growth for the quarter stood at 25% backed by lower cost of deposits. Other income grew at 22% YoY and 2% on sequential basis. RoA increased at 1.9% with RoE increased to 16.48% vs. 15.38% on sequential basis. C-I ratio decreased to 45.70% vs. 45.99% QoQ.

Margins:

Net Interest margin stood steady at 4.0%. The yield for consumer finance stood steady at 14.4% YoY while that for corporate book improved by 41 bps to 9.1%.

Asset quality:

Asset quality for the bank stood stable with GNPAs at 1.08% levels and NNPAs at 0.44% for the quarter, against 1.09% and 0.44% in the previous quarter. Low exposure to stressed assets, diversified and granular book & smaller restructured book (16bps) restores comfort on asset quality. Provision coverage ratio stood at 60% vs. 60%% sequentially. Restructured advances for the quarter stood at 0.16%.

Valuation & Outlook:

Indusind Bank has continued to show sustained progress across all vectors. At CMP of Rs.1,743 the stock is trading at 3.8(x) its FY 19E ABV. We have HOLD rating with a price target of Rs 1,906 based on 4.2(x) its FY 19E ABV.

Shares of INDUSIND BANK LTD. was last trading in BSE at Rs.1748 as compared to the previous close of Rs. 1742.6. The total number of shares traded during the day was 68581 in over 2308 trades.

The stock hit an intraday high of Rs. 1758 and intraday low of 1740.4. The net turnover during the day was Rs. 120018666.

Source : Equity Bulls

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