IndusInd Bank: Analysts stay neutral to positive post Q4 biz update, share target prices

Analysts tracking IndusInd Bank Ltd are neutral to positive on the stock's prospects following the private lender's March quarter business update. The bank has reported 18.3 per cent year-on-year rise in loan growth while it suggested deposit growth at 14.4 per cent in the fourth quarter. The deposit growth continues to lag loan growth, which is a gap IndusInd Bank still needs to bridge, analysts said.

IndusInd Bank said retail deposits witnessed a one-time net outflow of Rs 2,760 crore  in the March quarter on account of regulatory actions on a fintech partner. Adjusting for that, retail deposit growth would have been higher at 20.4 per cent YoY.

Nomura India said CASA growth was lower at 8.1 per cent YoY , leading to the CASA ratio falling 220 bps YoY to 37.9 per cent. Credit-to-deposit ratio was stable sequentially at 89 per cent, it said.

"We await further details from 4Q results. We expect margins to remain stable, while delivery on asset quality will be the key monitorable. Maintain Buy," the brokerage said while suggesting a target of Rs 1,760 for IndusInd Bank.

IndusInd Bank shares are down 4 per cent in 2024 against a flattish BSE Bankex. The stock is up 44 per cent for the one-year period.

InCred Equities said IndusInd Bank's margins may remain under pressure in the March quarter amid higher share of wholesale deposits as well as stiff pricing competition within retail lending space. It sees operating expense for the bank to remain elevated amid bank’s intention to improve physical presence. That said, it does not see any major asset quality stress and expects it to largely remain stable sequentially. 

"We have a HOLD rating on IndusInd Bank with target price of Rs 1,750 as we believe that the bank’s healthy performance is already priced in at its current valuation of 1.7 times. We expect IndusInd Bank to deliver 1.8 per cent RoA and 15 per cent RoE over FY25-36, valued the bank at 2 times FY25F BV," it said. 

IndusInd bank experienced steady growth in advances and deposits but CASA ratio fell slightly, said Arihant Capital Markets, as it maintained positive view on the stock with a target price of Rs 1,790. This brokerage has 'Hold' rating on the stock as it values IndusInd Bank  a 1.6 times FY26 adjusted book value .

Motilal Oswal said IndusInd Bank continued to experience a healthy loan growth trajectory and it expects the trend to sustain. "This is likely to support margins going forward. The deposit franchise too is growing at a steady pace," it said while suggesting 'Buy' on the stock.