IndusInd Bank Q3 Results Review - Slippage Guidance Miss Dulls An Otherwise Good Performance: Systematix

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.IndusInd Bank Ltd. reported Q3 FY24 earnings of Rs 23 billion (+5% QoQ, 17% YoY) which were inline with estimates as higher total income and lower provisions (on utilisation of contingency buffer as against stated guidance of accretion to the said buffer) were largely offset by higher operating expenses. IndusInd Bank’s focus on granularisation was reflected in-advances growth (+3.7% QoQ) being led by retail loan growth (4.7% QoQ) which in turn was led by 6-11% QoQ growth in granular segments of personal loan, home loan, credit cards, two-wheeler and utility vehicles,Deposit growth of 2.6% qoq was also led by retail deposit growth of 5% QoQ. Hence, retail mix in advances increased by 50 bp QoQ (55.2% in Q3) and that in deposits increased by 100bp QoQ (45% in Q3). Net interest margin remained stable QoQ with yields in the consumer banking segment increasing by 23 bps QoQ. IndusInd Bank also maintained its FY24 NIM guidance of 4.2- 4.3% (versus 4.3% in nine months-FY24). CIR increased to 48% (71 bp) due to business investments and branch additions and will remain elevated for the next one-two quarters. Asset Quality was a key disappointment as gross slippage ratio remained elevated at 2.25% in Q3 (1.96% in Q2) due to slippages in the corporate book and vehicle finance. The company also continued to utilize contingent provision buffer of Rs 2.2 billion with the buffer now declining to 40 bps (of net advances) as of Dec-23 versus 66 bps at March 2023. For FY24, the bank retained its credit cost guidance of 110-130 bps..We maintain our 'Buy' rating and raise our target price to Rs1,900 (from Rs 1,640) as-we rollover forecasts to March 2026,raise our target multiple to 1.8 times March 26 adjusted book value per share (versus 1.6 times earlier) for an average FY25-26E return on asset /return on equity of 1.9%/15.8%, on factoring prevalent lower risk-free rates and on incorporation of a rate cut in H2 FY24. We factor continued growth in higher yielding businesses of vehicle finance/microfinance (post recent investments in digital and capacity additions) with relatively stable margins in near term. On a price-earning basis, the stock is currently trading at a FY25E PE of 12 times for FY24-26E earning per share compound annual growth rate of 17%..Click on the attachment to read the full report:.IndusInd Bank Q3 Results Review - Positives Priced In: Dolat Capital.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

IndusInd Bank Q3 Results Review - Slippage Guidance Miss Dulls An Otherwise Good Performance: Systematix

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