scorecardresearch
IndusInd Bank shares zoom 5% post Q4 results! What should investors do?

IndusInd Bank shares zoom 5% post Q4 results! What should investors do?

The lender had reported a profit of 876 crore in the year-ago period.

IndusInd Bank shares zoom 5% post Q4 results! What should investors do? IndusInd Bank shares zoom 5% post Q4 results! What should investors do?

Shares of IndusInd Bank zoomed over 5 per cent to hit an intraday high of Rs 1025.95 on BSE after the bank reported a 55.3 per cent rise in its consolidated net profit at Rs 1,361 crore for the quarter ended March 2022. The lender had reported a profit of 876 crore in the year-ago period.

The bank's interest earned during the quarter under review rose 6 per cent to Rs 7,860 crore as compared to Rs 7,419 crore a year ago. IndusInd's provisions and contingencies declines 21.5 per cent to Rs 1,464 crore versus Rs 1,866 crore in the same quarter last fiscal.

Read more: IndusInd Bank Q4: Net profit rises 55% to Rs 1,361 cr, board declares dividend

Net Interest Income (NII) for the said quarter came at Rs 3,985 crore, grew by 13 per cent YoY and 5 per cent QoQ. Net Interest Margin (NIM) stood at 4.20 per cent against 4.13 per cent.

The bank's asset quality improved in this quarter. Its gross non-performing assets (NPAs) reduced to 2.27 per cent as against 2.48 per cent in the previous quarter (Q3FY22), while net NPA came at 0.64 per cent versus 0.71 per cent in the earlier quarter.

Brokerage house Motilal Oswal noted that the bank’s operating performance remains on track, led by healthy NII growth, lower slippages, and controlled provisions.

It highlighted that the asset quality ratios improved sequentially as stress in the MFI/Vehicle portfolio subsided. The management guided at continued momentum in loan growth, led by steady trends across both Consumer and Corporate businesses. Healthy provisioning in the MFI portfolio and a contingent provisioning buffer of 1.4% of loans will enable a sharp drop in credit cost, driving a sharp recovery in earnings.

"We expect 37 per cent PAT CAGR over FY22-24, resulting in 15.5 per cent RoE in FY24. We maintain our Buy rating with a TP of Rs 1,300 per share (1.7x FY24E ABV)," it added.

"On core fundamentals, two issues remain overhang: high CASA composition with much lower retail deposit share as per LCR disclosures and consistently high retail credit yield even with elevated GNPA in retail loan segments. We maintain the stock rating at 'Hold' with a revised target price at Rs 1,041 (from an earlier target price of Rs 1,055)," Systematix said in its recent report.

ICICI Securities noted that focusing on domain segments and new launches will keep business growth healthy. Healthy provision covers and lower slippages will aid earnings momentum. Also, healthy NIM, control on opex, and moderation in slippages with adequate capital adequacy will boost return ratios ahead.

It values the bank at 1.6x FY24E ABV and has maintained a target price of Rs 1150 per share.

Meanwhile, the Board also approved the payment of dividend at the rate of Rs 8.5 per equity share of Rs 10 each of the bank, for the Financial Year 2021-22 (85%), subject to the approval of the shareholders at the ensuing Annual General Meeting.

Published on: May 02, 2022, 11:58 AM IST
Posted by: Tanya Aneja, May 02, 2022, 11:49 AM IST