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Equirus
IndusInd Bank (Long)
CMP: 1,557.06
Target: ₹1,960
We recently met with the IndusInd Bank (IIB) management, and key takeaways were: a) IndusInd Bank remains comfortable with loan growth of 25-30 per cent; b) The bank is not eyeing portfolio buyouts at present; c) Pricing power has improved across segments; d) Excluding IL&FS exposure, asset quality remains steady; e) 2HFY19 provisions would remain elevated as IIB looks to prudentially set aside provisions towards its IL&FS exposure.
View: As non-food credit growth has inched up to 15.6 per cent y-o-y, IIB is set to be a key beneficiary given that NBFCs and select private peers likely go slow on incremental business growth. With banks such as HDFC Bank, ICICI Bank, Axis Bank and SBI likely to have good penetration in most large corporate accounts, we believe IIB can further increase its wallet share in such accounts despite having 75 bps-100 bps higher MCLR rates. Maintain ‘long’.
Key risks: Increase in slippages and a slowdown in retail loan demand, especially from CV/vehicle segments.
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