Among global brokerage firms, BofA Securities and CLSA have both given price targets of Rs 1,400, signaling 20% upside potential.
“Slippages are declining, which improves NPL ratios. Business momentum is accelerating in segments where the bank is strongly positioned; this should result in a stable NIM outlook while lower borrowing costs can cushion a sharp rise in funding costs. This should keep RoEs at ~15%,” said Kotak Institutional Equities.
The domestic broker sees the fair value of the stock at Rs 1,350.
Analysts were surprised by the improvement in net interest margins (NIMs) by 35 bps QoQ to 4.24%.
For Anand Rathi, the main positive results were strong disbursements in the MFI and VF books, strong growth in retail deposits,
Balance sheet at 72% coverage with a provisioning buffer of Rs. 26 crore (1.1% of loans) and strong liquidity and capitalisation.
“Strong returns are expected as credit growth picks up and borrowing costs fall. We maintain our positive view of the bank at a TP of Rs 1,400 and rate it at 1.6x P/ABV on its FY25e book,” it said.
YES Securities, which has a price target of Rs 1,500 for IndusInd Bank, said cyclical stabilization boded well for now.
“The gross slippage ratio decreased from 3.6% in Q1 2023 to 2.4% in Q2 2023. The restructured book declined to 1.5% of prepayments from 2.1% a quarter ago. All-inclusive provisioning coverage remained healthy, with total loan-related provisions accounting for 140% of GNPA and 3% of the loan book,” it said.
Securities came out with a “Reduce” rating on the stock, saying that problems on the bank’s asset side appear to have stabilized and deposit mobilization is likely to become a challenge as large banks continue to occupy both sides of the balance sheet battle.
The brokerage sees the stock fall to 1,033 rupees.
(Disclaimer: Experts’ recommendations, suggestions, views and opinions are their own. These do not represent the views of Economic Times)
https://economictimes.indiatimes.com/markets/stocks/news/should-you-buy-or-sell-indusind-bank-after-q2-results-heres-what-brokerages-say/articleshow/94984838.cms IndusInd Bank stock news: Should you buy or sell IndusInd Bank after Q2 results? Here’s what brokerages say