IndusInd Bank price targets: Can Q3 results give stock a lift? Analysts share views on bank stock

IndusInd Bank Ltd 's December quarter results were a mixed bag as net interest income (NII) and pre-provision operating profit came in healthy, in addition to stable margin but there was a sharp increase in both retail and corporate slippages and a draw down from buffer provisions against guidance of a build-up, said brokerages.  

Slippage rose by a sharp 20 per cent QoQ, the highest in six quarters, said Nuvama Institutional Equities, adding that retail slippage was driven by LAP, agriculture, CVs and merchant businesses.

"While asset quality was a big miss, we take comfort in IndusInd Bank's improving LCR and consistent good growth in retail LCR deposits (5 per cent QoQ). Further IndusInd Bank is one of the few banks that benefit from a falling rate cycle. We revise target price to Rs 1,860 on 1.8 times FY26 BV (from Rs 1,665 earlier). The short-term price reaction to results could be mildly negative," it said.

Kotak said the bank continues to invest in the franchise, leading to elevated cost ratios. Meaningful outperformance, said Kotak, appears to be unlikely, as valuations are capped by relative valuations as well. This brokerage, though, upped its fair value on the stock to Rs 1,800 from Rs 1,600 earlier. Antique Stock Broking has suggested a target of Rs 1,925 on the stock.

The IndusInd Bank management has guided for a loan growth of 18-23 per cent over FY23-26, while slippages are estimated to normalise at Rs 1,200 crore going further.

"Healthy provisioning in the MFI portfolio and moderation in overall slippage run-rate will contribute to a further reduction in credit cost. Additionally, the presence of a contingent provisioning buffer of 0.4 per cent of loans provides further comfort," Motilal Oswal said as it reiterated its 'BUY' rating on the stock with a target of Rs 1,900, premised on 1.9 times September 2025 adjusted book value.

Nirmal Bang Institutional Equities said it has rolled forward its valuation to December 2025, valuing IndusInd Bank at 1.9 times ABV, deriving a target price of Rs 1,854 from Rs 1,687 earlier.

Considering IndusInd Bank's positioning in Vehicle Finance, MFI and other segments, loan growth is expected to be in healthy double digits, which along with stable margins and improved asset quality make the bank a strong re-rating candidate, Nirmal Bang said.

"If a final approval from the RBI to increase promoter’s stake comes through in the near future, then that will be another catalyst. The only key monitorable in our view will be the deposit growth, which has lagged credit growth and the cost of funds," it said.

 

Equirus said it has broadly retained its estimates for FY24/FY25. "Maintain LONG with an unchanged Mar’25 target of Rs 1,850 set at 1.8x (unchanged) one-year forward ABV," it said. HSBC reportedly has a target of Rs 2,040 on the stock, Macquarie Rs 1,900, Nomura Rs 1,880, Jefferies Rs 2,070 and Citi Rs 2,010.

 

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