For Q3, IndusInd Bank‘s profit was tad ahead of estimates while net interest income (NII) growth of 18% was healthy with slight rise in NIMs, as per analysts. The lender’s net profit rose nearly 69% from the year-ago quarter to ₹1,959 crore during the three-month period ended December 2022.
Jefferies
“We tweak earnings and see a healthy 22% Cagr in profits over FY23-25 aided by topline growth and reduction in credit costs. This can help improve ROA to 1.9% and ROE to 16% in FY25. Improvement in core performance as well as clarity on extension of CEO tenure (ends in Mar-23) will be key re-rating triggers for stock valuations. IIB is among our top picks in sector and raise target price to ₹1600.”
Emkay
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“We retain our BUY rating on the bank stock with a revised TP of ₹1,650 (earlier ₹1,500), valuing the bank at 2x Dec-24E ABV (vs. earlier 1.8x), given improving growth/RoA visibility. We believe RBI’s approval for MD’s term extension will be a key monitorable for the stock in the near term.”
Edelweiss
“While IIB posted Q3FY23 earnings in line and healthy, they are softer than peers. We are cutting the target valuation in anticipation of deepening challenges to deposit gathering for midsized banks. We are downgrading IIB to ‘HOLD’ (from ‘BUY’) with new TP at ₹1,375 as we see deposit competition intensifying, which is negative for mid-sized banks such as IIB. Low traction on savings and slower-than-sector opex growth may also hurt deposit collection. The RBI’s feedback on CEO reappointment would be a key near-term trigger.”
Antique Stock Broking
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“IIB’s earnings print were 5% above expectations and return ratios stays strong, however, the quarter had few disappointments in the form of SA deposits decline and consumer finance slippages, progress of which needs to be monitored. Overall, we still think valuations of 1.6x FY24 and 1.4x FY25 BV for a bank with expected RoA and RoE of 1.7% and +15% respectively, are reasonable. Maintain BUY with unchanged target price of ₹1,460.”
