Last Update: April 25, 2023, 13:32 IST
IndusInd Bank shares traded over 2% in intraday trade on Tuesday, aided by strong loan growth and steady operating performance in the March quarter by the private sector lender. The stock was the best performer in the S&P BSE Bankex index, followed by State Bank of India and Axis Bank.
IndusInd Bank beat market estimates by reporting a standalone net profit of Rs 2,040.51 crore in Q4FY23, a growth of nearly 50 per cent as against a net profit of Rs 1,361.37 crore in Q4FY22. The private lender announced a nearly 17 per cent increase in its net income in the Q4 results for FY 2022-23.
IndusInd Bank stock is currently down 11.6% from its 52-week high of Rs 1,275.25 touched on Sep 20, 2022, while it is up 47.5% against its 52-week low of Rs 763.75 touched on Jun 23, 2022. In the last one year, the stock has given a return of 19%, while it has fallen around 2% in the six-month period. In calendar year 2023, the large-cap stock has declined over 8%, while it climbed nearly 11% in a month.
Why are IndusInd Bank shares rising?
On why IndusInd Bank shares are rising today, Shreyansh Shah, Research Analyst at Stocksbox, said, “IndusInd Bank has delivered a decent performance in the fourth quarter, witnessing good momentum across businesses such as retail and corporate segments. The key metrics of the bank showed an improving trend in favor of asset quality with improved metrics including NII, ROA and ROE. We believe that going forward, the company can capture more market share and manage risks through greater diversification. We believe that a well-capitalised balance sheet, improving collection efficiencies across business segments (vehicles and MFIs are key), low credit costs, conservative provisioning and a strong focus on risk management framework should give the company a high valuation multiple. Will help you go. Ahead.”
After the fourth quarter results, JM Financial maintained “Buy” rating on the stock but reduced the target price to Rs 1,375 from Rs 1,470 earlier. “While IndusInd has made rapid improvements given that the tenure extension for the MD and CEO has been below market expectations, we believe the core performance for IndusInd continues to be in the right direction. Currently, the stock is trading at an attractive valuation of 1.5x FY25e BVPS (for an expected ROE of 16.7% FY25e) and hence makes for an attractive entry point. Buy with revised TP of Rs 1,375,” it said in a note.
LKP Securities has also maintained “Buy” rating with a price target of Rs 1,322, saying the bank’s core operating performance remains healthy. It stated that a high contingency buffer is likely to protect the bank from credit disruption from various restructuring plans. The brokerage said that the Q4 numbers were stable, but the spike in MFI GNPA (4.32% v/s 3.75%) and higher slippages are the biggest disappointments. The agency believes that the bank has made adequate provisions against potential stress. However, defaults from the auto segment and credit cost will be closely monitored in the coming quarters.
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