Buy IndusInd Bank; target of Rs 1900: Motilal Oswal
Motilal Oswal’s research report on IndusInd Bank
IndusInd Bank’s (IIB) PAT grew by a muted 5% YoY to INR9.8b in 3QFY19 due to contingent provision of INR2.55b (toward infra group). NII grew 21% YoY, while NIM was largely flat at 3.83% on account of a rise in cost of funds. Total income increased 22% YoY on the back of healthy other income growth of 24% YoY. Core fees grew 18% YoY, led by higher forex income and loan processing fees. Opex growth (+16% YoY) trailed total income growth, resulting in robust 27% YoY growth in PPoP.
however continued strength in the core business provides comfort. Merger with BHAFIN will strengthen the earnings profile and further boost the return ratios. We value IIB at INR1,900 (3.2x Sep’20E ABV).
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