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22 April, 2021 08:58 IST
IDBI Capital reiterates Buy rating on Indusind Bank; target price of Rs 1,050
Source: IRIS | 06 Feb, 2021, 09.27AM
Rating: NAN / 5 stars.
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IndusInd's Proforma GNPA stood at 2.93% and NNPA at 0.70%. However reported GNPA and NNPA were lower at 1.74% and 0.22% respectively. Bank Proforma slippages remain at Rs 25.08 billion (1.2% of loan book) and comprises 20% from Vehicle and MFI each, Corporate and retail (secured & unsecured) constitutes 15% and 45% respectively. Restructuring book would be 1.8% of book and within that vehicle involves 30% and corporate banking is 57%.

Bank reported Collection efficiency at 97.1% versus 94.7% for September month. Deposit saw stable growth of 10% YoY while advances remain flat YoY. NII grew by 11% YoY slightly decline YoY compared to Q2FY21 led by decline in margins; however non-interest income declined by 5% YoY up 10% QoQ). PAT decline by 34% YoY due to higher provisions (up 78% YoY) including provisions of Rs.11 billion on Covid-19. Bank maintains overall provision of Rs 32.61 billion against covid impact and 3.31% of loan related provision. "We re-iterate "Buy" rating with a new TP of Rs.1,050 (earlier Rs.700) based on P/BV of 1.6x (earlier 1.1x) FY23E as liability risks have decline and clarity has emerged on Covid impact," said IDBI Capital Markets & Securities.

"Continuations of business strategy under the new CEO have resulted in navigating through asset quality concerns better. Also, with higher liquidity (LCR at 140%) and bigger concern on deposits growth which is the key ingredient for banking industry seems to be abating," the brokerage firm added.

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