IndusInd Bank's results for the January-March quarter of FY23 are indicative of sustained improvement at the bank post-Covid and create room for further expansion of revenues, analysts said.
The private sector lender's net profit for the quarter rose 46% year-on-year to Rs 2,043.36 crore, as compared with Rs 1,400.5 crore a year ago. Analysts polled by Bloomberg estimated a net profit of Rs 2,038.5 crore for the January–March quarter.
Net interest income, or core income, for the bank rose 17% year-on-year and stood at Rs 4,669.46 crore.
The bank's gross non-performing asset ratio for the quarter fell eight basis points sequentially to 1.98%. Similarly, the net NPA ratio fell three basis points quarter-on-quarter and stood at 0.59%.
During the quarter, IndusInd Bank's microfinance business also saw a rebound, with disbursements jumping by 30% year-on-year to Rs 11,600 crore.
The bank's total advances for the year rose 21% year-on-year to Rs 2.9 lakh crore. IndusInd Bank's total deposits were also up 15% year-on-year at Rs 3.36 lakh crore.
Of this, current account savings account deposits were up 7% year-on-year and stood at Rs 1.35 lakh crore.
Shares of the private lender gained 1.33% to Rs 1,116.70 apiece as of 10:40 a.m., compared with 0.13% gains in the benchmark Nifty 50.
Out of the 51 analysts tracking the company, 44 maintain a 'buy' rating, six recommend a 'hold' and one suggests a 'sell' on the stock, according to Bloomberg data. The average 12-month consensus price target implies an upside of 28.9%.
Here's what analysts made of IndusInd Bank's Q4 performance:
Morgan Stanley
Growth was fairly balanced, led by vehicle finance, other retail, and corporate lending.
The 34-basis-point sequential rise in deposit costs was more than offset by higher corporate loan yields.
Strong potential for revenue growth acceleration and credit cost moderation.
Maintain 'overweight' with a target price of Rs 1,525 per share.
Emkay Global
Management expects better margins going forward as it benefits from the rate reversal cycle and rising mix of retail assets.
Deposit growth has been moderate at 15% year-on-year, but the CASA ratio declined due to the loss of one large government saving account—the National Highway Authority of India.
Trim FY24 earnings estimates by 2%, building in slightly lower growth and higher operating expenses.
Maintain 'buy' with a target price of Rs 1,600 per share.
Nirmal Bang Institutional Equities
Business momentum remains strong, with lower credit costs helping profitability.
Delinquencies in the microlending segment rose due to exposure to eastern states.
Management remains confident and has indicated that the worst of the restructured book and micro-loan slippages are over.
Maintain 'buy' with a target price of Rs 1,102 per share.
DAM Capital
The bank has brought itself back on track after Covid-19's impact and corporate asset quality issues.
A marginal rise in slippages from the consumer book remains a key negative.
Strong loan growth and steady interest margins are key positives.
Retain 'buy' rating with a target price of Rs 1,510 per share.
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