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HDFC Securities Institutional Equities
IndusInd Bank - Strong profit and loss; sub-par balance sheet
IndusInd Bank Ltd. reported its highest-ever quarterly earnings, mainly led by strong loan growth (up 21% YoY), stable margins and sustained traction in fee income. However, elevated gross slippages at 2.4%, primarily from micro finance institution (~13%) and corporate book (~11%) in addition to higher credit costs (142 basis points) suggest that IndusInd Bank is having to operate at the higher end of the risk spectrum, especially given its historically sub-par / non-granular deposit profile.
Over its next three year planning cycle, IndusInd Bank is focusing on achieving deposit granularity through its branch expansion strategy. However, we believe that the bank faces structural challenges in a deposit-constrained environment, translating into sub-optimal operating leverage from continued investments on both sides of the balance sheet.
Macrotech Developers - Well-placed for growth
Macrotech Developers Ltd. reported its highest-ever annual presales of 9.3 million square feet (+16% YoY), valued at Rs 120 billion (+33% YoY), beating its own guidance of Rs 115 billion. This was on the back of robust launches of 10.5 msf (+81% YoY).
For FY24, Macrotech Developers is expecting Rs 145 billion in presales (+20% YoY), with Rs 7-10 billion coming from two pilot projects in Bengaluru, Rs 20 plus billion from Pune and the rest from Mumbai Metropolitan Region. This 20% growth in presales will be driven by 5-6% growth in price (8% growth seen in FY23) and the rest from higher footfalls and conversion. The overall conversion rate was 7.5% in FY23 (6.8% in FY22).
Presales in township are strong and were Rs 23 billion (+16% YoY). This was on the back of a price increase of 5.5% and a higher conversion rate of 10%. Macrotech Developers targets to achieve an overall Rs 210 billion of annual presales by FY26.
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