Target: ₹1,450
CMP: ₹1,121.50
IndusInd Bank (IIB) reported an in-line Q4 FY23 performance with PAT at ₹2,040 crore (up 46 per cent y-o-y) and steady operating performance across all metrics. Loan growth was healthy at 21 per cent y-o-y with traction in both Corporate and Consumer Finance books.
IIB’s operating performance remains on track, led by steady NII growth and controlled provisions. Asset quality remains steady, even as slippages increased QoQ.
Management suggested for 18-23 per cent loan growth under Planning Cycle 6 (PC6), while continued moderation in credit cost is expected to aid RoA expansion.
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Overall, the outlook for credit cost remains controlled. Management is guiding for continued momentum in loan growth with 18-23 per cent improvement over FY23-26. Healthy provisioning in the MFI portfolio and contingent provisioning buffer of 0.7 per cent of loans will enable a steep decline in credit cost, thus driving recovery in earnings.
We estimate PAT to report 27 per cent CAGR over FY23-25, leading to a 17.6 per cent RoE in FY25.
We reiterate our Buy rating with an unchanged TP of ₹1,450 (premised on 1.7x Sep’24 ABV).