Target: ₹1,950
CMP: ₹1,560.85
IndusInd Bank Q3 PAT of ₹2,300 crore (5 per cent q-o-q/17 per cent y-o-y) was a beat on consensus, led by robust loan growth (3.7 per cent q-o-q), stable NIMs, lower credit cost (115 bps) and impressive growth in retail deposits (5 per cent q-o-q).
Overall Q3 ticked most boxes (stable NIMs/credit costs, broad based asset growth and good quality dep growth; slightly elevated auto/MFI slippages the only miss). Overall, the bank is well positioned to beat guidance/expectations on NIMs (b/s mix ideal in a rate cut cycle) and credit costs in FY25 – delivering close to 2 per cent RoAs.
We believe that IndusInd Bank offers the best risk-reward among midsize banks (MSBs) - with asset quality issues largely behind and core business getting back to growth mode. The bank is done with the cleanup of legacy issues and provision buffer for overall as well as MFI book looks adequate.
IndusInd Bank’s steady PPOP growth profile is likely to standout during the rate cut cycle. We adjust our EPS by 2-3 per cent and increase our price objective to ₹1,950 (from ₹1,850).