Broker’s call: IndusInd Bank (Buy)

Target: ₹1,995

Target: ₹1,995

CMP: ₹1,445.85

IndusInd Bank (IIB) reported a PAT of ₹2,350 crorein Q4-FY24, growing by 15 per cent y-o-y and 2.2 per cent q-o-q driven by lower credit cost. It was above than our estimate of ₹2,300 crore.

NII grew by 15.1 per cent y-o-y and 1.5 per cent q-o-q, however it was slightly lower than our estimates. Margin profile of the bank was stable over the last six-seven quarter, NIM came in at 4.26 per cent in the quarter and is expected to go up as contribution increases of higher yield loans. PPOP grew by 7.6 per cent y-o-y and 0.6 per cent q-o-q, was below than our estimates.

The bank’s loan growth is expected to sustain for FY25 and FY26. the contribution of higher yield product is likely to go up which will keep margin on a bit higher side from current level. Asset quality stabilised in the quarter and GNPA are expected to come down slightly over the next two years. PAT is expected to register a healthy growth, reporting a CAGR of 19 per cent over FY24-FY26 period.

Return ratio continued improved over the last four years and likely to expand further from this level. Based on our estimates, RoE/RoA is expected at 16.2/1.94 per cent in FY26. We revised upward our target price to ₹1,995 a share valuing bank at P/ABV 1.9xFY26E.

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