IndusInd Bank share price soared 5% in early trade on Thursday after the company reported a 60.5% on-year rise in net profit at Rs 1,631.1 crore for the quarter ended June 30, 2022, which was above analysts’ expectation. The stock ended 8 per cent up at Rs 948.15 apiece on BSE. The rise in net profit was helped by a 30 per cent on-year fall in provisions as well as a 16 per cent growth in net interest income (NII). Lender’s micro slippage fell to a seven-quarter low of 8.5%. IndusInd Bank shares were quoting at Rs 925 intraday, up 5.21% on NSE. So far this year, IndusInd Bank share price has risen merely 1.32%. However, analysts remain bullish on the stock and see up to 60% potential rally going forward.
Should you buy, hold or sell IndusInd Bank shares?
ICICI Securities: Buy
Target price: Rs 1,420; Upside: 60%
According to the brokerage house, Now carrying provisioning of 3.38% against stress pool (NPA + restructuring + SMA1/2 + net SRs) of 5.6% suggests credit cost trajectory should normalise to less than 1.7%. “This will be partially offset by some pressure on NIMs given the dominance of fixed rate portfolio and focus on retail TD mobilisation. Nonetheless, domain expertise in niche lending segments provides some flexibility to pass on the rising funding cost pressure,” it said. Scale up of retail, investment in franchise expansion and technology initiatives will drive up cost structure. Additionally, revival in MFI and some vehicle financing products, and encouraging growth in corporate lending, will drive loan growth towards 2-year target of 15-18%, it added. ICICI Securities maintains ‘buy’ call on the stock with target price of Rs 1,420 apiece.
Motilal Oswal: Buy
Target price: Rs 1,300; Upside: 48%
According to analysts at Motilal Oswal, IndusInd Bank’s operating performance remains on track led by healthy NII growth and controlled provisions. Asset quality ratios increased marginally on higher slippages from restructured assets though credit cost outlook remains in control. “The management is guiding for continued loan growth momentum driven by steady trends across both consumer and corporate businesses. Healthy provisioning in the MFI portfolio and contingent provisioning buffer of 1.2% of loans will enable a sharp decline in credit costs, thereby driving sharp recovery in earnings,” they said. The brokerage estimates PAT to grow at 35% CAGR over FY22-24 leading to 15.2% RoE in FY24. It maintains ‘buy’ rating with a target price Rs 1,300 (premised on 1.7x FY24E ABV).
Sharekhan: Buy
Target price: Rs 1,050; Upside: 19%
According to analysts at Sharekhan by BNP Paribas, a well-capitalised balance sheet, improvement in collection efficiencies in the MFI business, reduction in fresh slippages from standard book, high PCR levels, and lower credit cost would augur well for IndusInd Bank’s return ratio profile. Given improved demand in its vehicle portfolio, MFI business, and corporate book, the bank is on an upward trajectory path in terms of achieving sustainable higher growth going forward along with building granular low-cost retail deposit franchise, they said. The brokerage lowered its target multiples, factoring in higher cost of equity. It maintains ‘Buy’ rating on the stock with a revised price target of Rs 1,050.
(The stock recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)