IndusInd Bank - Earnings characterised by revival of growth in focused segments and final leg of stress provisioning - ICICI Securities

IndusInd Bank's (IIB) Q4FY22 performance was characterised by an improved NIM profile, revival in growth momentum (in focused segments) and final leg of stress recognition and provisioning. With credit cost settling at >2.9% for FY22, it is now carrying provisioning of 3.5% against stress pool (NPA + restructuring + SMA-1/2 + net SRs) of 6.3%. This suggests credit cost trajectory should normalise. NIMs, up 10bps QoQ, settled at higher end of the guided range. Dominance of fixed-rate portfolio and focus on retail TD mobilisation will lead to lagged benefit in a rising interest rate environment. Disbursements reaching pre-covid levels in most retail products, revival in MFI and some vehicle financing products, and encouraging growth in corporate lending, will drive loan growth towards 2-year target of 15-18%. We expect IIB to deliver >5% PPoP/loans, 1.7%/1.9% RoAs and 15%/16% RoEs by FY23E/FY24E. Maintain BUY with an unchanged target price of Rs1,420. Key risks: 1) lower-than-estimated growth, 2) credit cost not normalising soon.

Shares of IndusInd Bank Limited was last trading in BSE at Rs. 1019.00 as compared to the previous close of Rs. 978.20. The total number of shares traded during the day was 271036 in over 9399 trades.

The stock hit an intraday high of Rs. 1025.95 and intraday low of 968.00. The net turnover during the day was Rs. 274014500.00.

Source : Equity Bulls

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IndusIndBank INE095A01012 ICICISecurities