Here Are The Key Highlights From IndusInd Bank’s Analyst Meet

IndusInd Bank Ltd. aims to expand its rural presence using the distribution network of Bharat Financial Inclusion Ltd., which is merged with the private lender.

The bank, in its two-day analyst meet, said it would also focus on retail deposits and double its non-vehicle consumer book in three years.

Here are key highlights from the analyst meet compiled from the brokerage reports:

Microfinance Business

• To scale up rural banking, leverage Bharat Financial’s microfinance business.
• Has opened more than 16,000 retail distribution and service points known as “Bharat Money” stores.
• To scale up Bharat Money stores count to 160,000 by March 2021.
• Bharat Financial has ramped up technology use to cut costs. It’s also among the top 10 firms that use Aadhaar verification.
• To make the microfinance book self-funded in five-seven years.

Non-Vehicle Consumer Banking

• To double the non-vehicle retail book by FY23.
• To double its retail client base to 12 million in three years.
• There’s a balanced requirement of “Phygital” but must remain highly innovative.
• Will not take high risks in unsecured lending, keeping it at less than 5 percent.
• Chase affluent and non-resident Indians to mop up consumer deposits from them to 40 percent versus 25 percent now.

Vehicle Finance

• Gain market share in commercial vehicle financing.
• Bullish on construction equipment segment.
• Increase presence in two-wheeler financing.
• Focus on cross-selling car financing to internal customers.
• Worst growth phase in CV financing is offset by opportunities in cars, two-wheelers and tractors.

Commercial Banking

• To build strong loan book in next three years.

Analysts View

Brokerages, including Emkay Global, Nomura, Jefferies, Prabhudas Lilladher and Edelweiss, have maintained their bullish investment recommendation on IndusInd Bank after the analyst meet.

Nomura

• Maintains ‘buy’ and hiked target price to Rs 1,750 a share from Rs 1,575.
• Near-term issues in corporate asset quality could linger.
• Bank’s asset side strength should offset its weakness of liabilities.

Prabhudas Lilladher

• Retains ‘buy’ with a target price of Rs 1,640 apiece based on 2.5 times September adjusted book value.

Edelweiss

• Maintains ‘buy’ with a target price of Rs 1,793 apiece.
• Bank would keep delivering improved revenue traction and sustainable earnings growth with superior mix and strengthened franchise.

Emkay Global

• Maintains ‘buy’ with a target price of Rs 1,725 a share.
• Current valuations at 2.3 times September 2020-21 estimated adjusted book value looks attractive for a bank with healthy return ratios (2 percent return on assets/18-9 percent return on equity).
• Higher retail orientation and a strong capital position.