IndusInd Bank Q1 Results Review - Inline; Growth Outlook Remains Healthy: Motilal Oswal

Motilal Oswal Report

IndusInd Bank Ltd. reported an inline Q1 FY24 performance with profit after tax at Rs 21.2 billion (up 30% YoY), aided by healthy net interest income growth (up 18% YoY) and lower provisions (down 21% YoY).

Loan growth was healthy at 22% YoY to Rs 3.0 trillion with traction in both corporate and consumer finance books. Within the consumer book, growth was broad based, with notable outperformance in the utility vehicles (up 44% YoY) and credit cards segments (up 39% YoY).

Micro finance institution loans was flat sequentially, due to the seasonality of business and Q1 generally being a weak quarter.

Fresh slippages declined 14% QoQ to Rs 13.8 billion (2.0% annualised). This decline was primarily driven by a reduction in slippages within the corporate book, which decreased to Rs 0.4 billion from Rs 2.6 billion in Q4 FY23.

Gross/net non-performing asset ratios improved 4 bp/1 bp QoQ to 1.94%/0.58%. Restructured book declined to 0.66% in Q1 FY24 from 0.84% in Q4 FY23.

Management suggested for 18-23% loan growth under Planning Cycle six, while moderation in credit cost is expected to aid return on asset expansion.

We estimate IndusInd Bank to deliver ~27% earnings CAGR over FY23-25, while its RoA/RoE would expand to 2.1%/17.5%.

We reiterate our 'Buy' rating with a revised target price of Rs 1,600 (premised on 1.7 times FY25E adjusted book value).

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