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ICICI Securities Report
Despite elevated opex, IndusInd Bank Ltd. reported Q4 FY24 profit after tax of Rs 23.5 billion, up 15% YoY driven by 15% net interest income growth and ~13% YoY decline in provisioning. Return of assets remained strong at 1.9% for Q4 FY24 as well as FY24.
Gross slippages improved QoQ across subsegments, though the bank has part consumed contingent provisions. We believe IndusInd Bank is well placed on growth, net interest margin and asset quality troika.
IndusInd Bank has delivered amongst the highest compound annual growth rate (FY21-24) in retail deposits, which should sustain, fuelling superior ~18% CAGR in loans over FY24-26. Net interest marginis likely to remain stable, resulting in sector-leading ~17% CAGR in net Interest Income and pre-provision operating profit for FY24-26E.
In our view, IndusInd Bank has 5–15 basis points improvement scope in each of NIM, opex to assets and credit costs over FY24-26E.
Yet, we conservatively factor in cumulative ~5 bps return of assets expansion to 1.9% (FY25-26E), as we believe IndusInd Bank would be re-investing in the franchise and/or add contingent provision and/or elongate growth trajectory.
Retain 'Buy'; target price unchanged at Rs 2,000.
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