Notwithstanding this, top brokerages remain optimistic about the prospects of the fifth-largest private lender. While Macquarie has retained an ‘Outperform’ view, domestic brokerages Motilal Oswal and Nuvama have reiterated their buy stance.
Private lender IndusInd Bank on Thursday reported standalone net profit growth of 17% YoY at Rs 2,298 crore for the quarter ended December. It was Rs 1,959 crore in the year-ago period. Net interest income for the third quarter rose 15% to Rs 5,296 crore. The profit was slightly above analysts’ expectations.
Read More: IndusInd Bank Q3 Results: Net profit rises 17% YoY to Rs 2,298 crore; NII up 15%
Here’s what brokerages recommend on the stock:
Macquarie: Outperform | Target: Rs 1,900
Macquarie has maintained an ‘Outperform’ rating on the counter with a target price of Rs 1,900. In its post-earnings stock review, the brokerage said that IndusInd Bank remains one of its top picks. The PAT was in line with its estimates with the retail loans and deposit growth remaining strong. The bank was able to utilise contingent buffers, it said while highlighting a problem area in the form of slippages. Macquarie said that it awaits normalisation of slippages and credit costs.
Motilal Oswal: Buy | Target: Rs 1,900
Motilal Oswal has retained its buy view on the counter for a price target of Rs 1,900. IndusInd Bank’s 3QFY2024 earnings were in line with the brokerage’s estimates. Loan and revenue growth were healthy, it said in a note. However, the CASA ratio moderated while fresh slippages rose 20.5% QoQ driven by a rise in slippages in the corporate book.”We estimate IIB to deliver a 21% earnings CAGR over FY24-26, leading to RoA/RoE of 2.0%/16.2% by FY25,” the brokerage note said.
Nuvama: Buy | Target: Rs 1,860
Nuvama has retained a buy rating on IndusInd Bank while revising its target from Rs 1,665 to Rs 1,860. Calling its Q3 earnings mixed, it highlighted positives in the form of the bank’s net interest income (NII) and pre-provision operating profit (PPOP) which it said were healthy. The net interest margin (NIM) was stable and the liquidity coverage ratio (LCR) improved QoQ. In Nuvama’s view, IIB is one of the few banks that benefit from a falling rate cycle.
Among the negatives, the bank reported a sharp increase in both retail and corporate slippage and a drawdown from buffer provisions versus guidance of a build-up. “Slippage rose by a sharp 20% QoQ, the highest in six quarters,” Nuvama said.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
