IndusInd Bank Q4 Results Review - Earnings Outlook Robust; Business Growth Steady: Motilal Oswal

Motilal Oswal Report

IndusInd Bank Ltd. reported an in-line Q4 FY23 performance with profit after tax at Rs 20.4 billion (up 46% YoY) and steady operating performance across all metrics.

Loan growth was healthy at 21% YoY with traction in both corporate and consumer finance books. Within consumer, growth was broad based barring two-wheelers and loan against property. Micro finance institution loans reported a healthy sequential pick up.

Fresh slippages increased slightly to Rs 16 billion (2.4% annualised) on residual cleansing in the MFI book and one technical slippage in the corporate book. However, gross/net non-performing asset ratios improved 8 basis points/3 bp QoQ to 1.98%/0.59%. Restructured book declined to 0.8% in Q4 FY23 from 1.25% in Q3.

Management suggested for 18-23% loan growth under Planning Cycle 6, while continued moderation in credit cost is expected to aid return on asset expansion. We estimate IndusInd Bank to deliver ~27% earnings compound annual growth rate over FY23-25, while its return on asset/return on equity would expand to 2.1%/17.6%.

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