IndusInd Bank - Improving visibility towards >5% PPoP/loans, >1.8% RoAs and 15% RoEs

Our interaction with the management of IndusInd Bank (IIB) suggests that the macro uncertainties / volatility amidst current geopolitical situation and prolonged supply disruption may pose some risk to financing demand in gems / jewellery (Russia accounts for ~30% of global diamond output) and vehicle financing (due to rise in fuel prices). Nonetheless, with disbursements reaching pre-covid levels in most retail products, revival in MFI disbursement and encouraging growth in corporate lending will lead growth towards IIB's 2-year credit growth target of 16-18%. With respect to MFI portfolio, independent review findings are in line with affirmations made earlier and incremental provisioning impact is a mere <1bps of advances. We expect slippages to moderate to 3.5% in Q4FY22 and lower in FY23E, and credit cost to start normalising FY23E onwards. We expect IIB to deliver >5% PPoP/loans, >1.8% RoAs and 15% RoEs by FY23E. Maintain BUY with an unchanged target price of Rs1,420. Key risks: 1) lower than estimated growth, and 2) credit cost not normalising soon.

Shares of IndusInd Bank Limited was last trading in BSE at Rs. 901.50 as compared to the previous close of Rs. 904.15. The total number of shares traded during the day was 129251 in over 3936 trades.

The stock hit an intraday high of Rs. 915.70 and intraday low of 893.55. The net turnover during the day was Rs. 116951027.00.

Source : Equity Bulls

Keywords

IndusIndBank INE095A01012 INDUSINDBK ICICISecurities