IndusInd Bank Q1 Results Review: Motilal Oswal Maintains 'Neutral' Stance, Revises Target Price — Here's Why
The appointment of a new CEO and the pace of business recovery will be the key near-term monitorables, adds Motilal Oswal
IndusInd Bank returned to profitability in Q1 FY26, with a net profit of Rs 6 billion (72% YoY decline, 6% beat). Net interest income declined 14% YoY to Rs 46.4 billion (12% beat). Adjusted for one-offs, NIM contracted 12bp QoQ. The bank delivered 11bp of positive impact on NIM due to the one-offs from interest reversal on IT refund and interest recovery in one account.
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Motilal Oswal Report
IndusInd Bank Ltd. returned to profitability in Q1 FY26 after reporting a loss in previous quarters due to several one-offs. Other income was hit by lower fee income, but treasury gains and net interest income led to a slight beat on earnings. Adjusted net interest margin contracted 12 bp QoQ.
The advances book declined as the bank strategically reduced its corporate lending. Management expects vehicle finance demand to remain subdued. Deposit growth remained muted as the bank exited bulk and credit-deposit funding, though the CD ratio remained comfortable at 84%.
The asset quality deteriorated primarily due to micro finance, and management expects it to take six months to stabilize.
We slightly raise our earnings estimates by 2.6%/2.3% for FY26/27 as the bank is focusing on containing costs and is adopting a profitability-first approach. We estimate an RoA/RoE of 0.7%/6.4% for FY27.
Reiterate Neutral with a target price of Rs 830 (premised on 0.9x FY27E book value).
The appointment of a new CEO and the pace of business recovery will be the key near-term monitorables.
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