IndusInd Bank shares at Rs 1,800? Stock price targets upped post Q1 results

IndusInd Bank's June quarter profit growth at 30 per cent met with Street expectations, thanks to a 20 per cent decline in year-on-year (YoY) provisions and 15 per cent YoY growth in operating profit. Analysts said loan growth was solid while asset quality and net interest margin (NIM) remained stable. They see scope for improvement in NIM due to asset mix, there by improving return ratios.

The positive commentary and higher target prices by a few brokerages lifted the stock by 2.71 per cent to Rs 1,428 level in Wednesday's trade. Morgan Stanley has a target of Rs 1,800 on IndusInd Bank, Goldman Sachs at Rs 1,681, Citi Rs 1,630 and JPMorgan 1,250.   

Antique Stock Broking, which has upped target on IndusInd Bank to Rs 1,600 from Rs 1,525, said return on asset of 1.8 per cent has sustained for three straight quarters despite a relatively higher credit cost of 1.3–1.4 per cent. It expects the bank to sustain strong return ratios with RoA of 1.8 per cent/ 1.9 per cent and RoE of 15 per cent/ 16 per cent over FY24– 25E.

"Liability risk, asset quality deterioration, and management uncertainty—first on the extension

for Sumant as MD & CEO and thereafter a shorter tenure (two years permission) created an overhang on the stock. However, these have now taken a back seat and with earnings parameters stabilising," the brokerage said.

With high credit cost behind, not to mention a stable NIM and steady loan growth, IndusInd Bank's earnings shall outperform the sector, said Nuvama Institutional Equities said. The RBI approval on higher promoter stake is pending and it could be a month away, it added .

The IndusInd Bank CEO has retained loan growth guidance of 18–23 per cent with MFI, including merchant

business, likely to grow at the lower end of the range. IndusInd Bank said it would resume building buffer provisions of Rs 400–500 crore in FY24.

Motilal Oswal Securities said IndusInd Bank's operating performance remains on track, led by steady NII growth and controlled provisions. Asset quality remains steady, with fresh slippages declining sequentially in the corporate book, it said/

"Overall, the outlook for credit cost remains controlled. We estimate PAT to see a 27 per cent CAGR over FY23-25, leading to a 17.5 per cent RoE in FY25. We reiterate our BUY rating with a revised target of Rs 1,600 (premised on 1.7 times FY25E adjusted book value," the brokerage said.

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