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Buy IndusInd Bank; target of Rs 1400: ICICI Direct

October 17
01:24 2019

ICICI Direct’s research report on IndusInd Bank

IndusInd Bank’s operational performance continued to remain steady, led by healthy NII growth & other income growth of 32% & 31% YoY to Rs 2910 crore & Rs 1727 crore, respectively. Margins improved marginally by 5 bps to 4.10% largely attributable to a decline in cost of funds. Provision for the quarter were at Rs 738 crore, up 71% QoQ. Accordingly, PAT came in at Rs 1384 crore, up 50%. However, benefits due to corporate tax cut were utilised to create floating provision of Rs 355 crore and shore up PCR.

Outlook

Therefore, we upgrade the stock from HOLD to BUY with a target price of Rs 1400 (earlier Rs 1605) valuing the stock at ~2.3x FY21E ABV. Leadership succession is on the cards. Top internal candidate being considered should address investor concerns.

For all recommendations report, click here

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