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Buy IndusInd Bank; target of Rs 2250: Motilal Oswal

July 11
17:25 2018

Motilal Oswal ‘s research report on IndusInd Bank

IndusInd Bank’s (IIB) 1QFY19 PAT grew 24% YoY to INR10.4b (marginally below our estimate). NII rose 20% YoY, while the NIM moderated 5bp QoQ, driven by an increase in funding cost (+22bp QoQ).Total income grew 16% YoY due to muted other income (+12% YoY) on account of low treasury gains (INR1.37b v/s INR1.93b in 1QFY18). Core fee income grew 20% YoY, led by 32% growth in distribution income. Controlled opex growth of 12% YoY (CI ratio declined 80bp QoQ to 44.2%) led to PPoP growth of 20% YoY (+8% QoQ).

Outlook

The bank is targeting 25-30% loan growth, driven by continued branch expansion (aiming 2,000 branches by FY20 v/s 1,400 currently) and customer acquisition (+2x to 20m). Merger with BHAFIN will strengthen the bank’s earnings profile and further boost its return ratios. We maintain our estimates and revise our target price to INR2,250 (4x FY20E ABV).

For all recommendations report, click here

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