Buy IndusInd Bank; target of Rs 1400: ICICI Direct
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.
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.
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