IndusInd Bank share price rises 27% in one month, outperforms Nifty; Analysts rally, see 39% more jump
IndusInd Bank share price has risen nearly 27 per cent in the past one month, outperforming the benchmark Nifty 50, which has gained 8 per cent. IndusInd Bank shares were up 2.7% at Rs 1,045 on NSE intraday. The private sector bank has reported a 61 per cent jump in net profit for the April-June quarter over the past two days to Rs 1,631.02 crore mainly on account of a fall in bad loans. So far this year, IndusInd Bank shares are up 13 per cent and up 39% after brokerage firms restored their confidence in the lender’s ability to deliver on retail liability and asset growth following management remarks Is.
Should you buy IndusInd Bank shares?
Business model, trust management team
Edelweiss Securities said in a report that with the appointment of new leaders for two of IndusInd Bank’s core businesses, Vehicle Finance (VF) and Micro Finance (MF), concerns emerged that they would be as good as their predecessors. However, the leaders’ first public address gave the brokerage confidence that the successors were capable of growing these businesses. “Besides the cyclical improvement in earnings expected over the next two years, the bank is focusing on structural changes by making its business model more granular and digital.
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The brokerage further informed that IndusInd Bank will announce a new domain in addition to the existing three next year. “The new domain will be acquired mostly inorganically. It will also introduce traditional investment banking and para-banking. 1.3x PBV in FY24E we find the risk-reward compelling,” it said. The brokerage maintains a ‘Buy’ rating on the stock with an increased target of Rs 1,350 as it has more rest on the model and the team follows the analyst day.
Property enhancement achievable; Expansion into domestic markets to be a key growth driver
Brokerage firm Prabhudas Lilladher believes that expansion in the domestic markets will be a key driver for the growth of IndusInd Bank’s business. “The bank is targeting a CASA ratio of 45%, while the retail to wholesale loan mix may change from 52:48 to 60:40. Better earning quality is also a focus area. While asset growth is achievable, material RTD growth may not be easy given the tight systemic liquidity. However, asset quality risk has eased and the RoE improvement in FY22-24E from 10% to 15% guarantees higher valuations, according to analysts. Prabhudas Lilladher maintained a multiple at 1.8x at FY24 ABV and retained a ‘Buy’ rating with a target price of Rs 1,300.
Execution and Management Continuity Should Be Key
ICICI Securities expects IndusInd Bank to deliver 5% PPoP/loans, 1.7%, 1.9% RoAs and 15%, 16% RoE by FY23E and FY24E respectively. It places a ‘buy’ call on the stock with an unchanged target price of Rs 1,420 (1.8x FY24E book), up 39% from Thursday’s closing price. “We believe execution and management consistency will be critical,” he said.
(The stock recommendations in this story are by relevant research analysts and brokerage firms. FinancialExpress.com takes no responsibility for their investment advice. Capital markets are subject to investment rules and regulations. Please consult your investment advisor before investing .)