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Target: ₹1,400
CMP: ₹1,063.95
IndusInd Bank (IIB) has recovered from its past challenges and has been progressing well on guided lines. Strong growth potential from a well-diversified loan book with a rising share of retail loans along with healthy capital ratios (Tier-I capital at 16.5 per cent as of Q3FY2023) gives loan growth visibility. In the retail loan segment, vehicle finance and micro finance book are expected to be growth boosters.
Moreover, its underwriting practices have been tested in this segment as these portfolios have seen a downcycle. The bank is also speeding up its efforts to improve the retail liability franchise, which is a key positive. Retail deposits have gone up from about 26 per cent in FY2019 to about 42 per cent in 9MFY2023.
Increasing share of retail deposits has been a key focus area for the bank, with 87 per cent of incremental deposits over FY2020-9MFY2023 coming from retail deposits and CASA. The bank has acknowledged the learning due to the challenges it faced in the past due to higher reliance on wholesale deposits and borrowings.
We believe the focus would now shift back to business performance from hereon and re-rating would depend upon sustained earnings progression on guided lines. estimates.
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