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Dolat Capital Report
IndusInd Bank Ltd. Q4 results were in-line with
Net interest income/profit after tax growth of 15% YoY each,
healthy loan growth at 5% QoQ,
stable net interest margin at 4.26%, and
moderation in slippages across segments.
However, traction in retail deposits (+2% QoQ) was relatively muted and earnings continued to benefit from utilization of Rs 3 billion contingent provisions.
Management intends to maintain 1.5-2% provision buffers against micro finance Institutions book and 0.5% against MHCV book, going forward. Slippages at 1.8% were contained and sequential loan growth was driven by consumer finance (+6% QoQ) and small corporates (+7%).
We tweak our earnings and build in earnings compound annual growth rate of 19% over FY25E/26E.
Upgrade to ‘Buy' rating from 'Accumulate' with revised target price of Rs 1800 (from Rs 1760 earlier) given run-up in stock price, valuing at 1.7 times FY26E price book value against return of assets/return of equity of 1.9%/16%.
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