IndusInd Bank a 'mega-cap' in the making: Morgan Stanley

MUMBAI: Morgan Stanley in a report on Friday called IndusInd Bank a 'Mega-cap' in the making as it expects the stock to double in three years time and become a mega-cap by financial year 2020.

The brokerage is overweight on the stock with a target price of Rs 1,600. It expects earnings growth to accelerate and premium valuations to sustain.

Morgan Stanely said the bank has a well-diversified lending portfolio but that it still has a small loan share across segments. It believes a further widening of the portfolio, focus on cross-sell and strong trailing network expansion should help accelerate loan growth.

It said since CEO Ramesh Sobti and team's joining in 2007-08 has gone from being largely a vehicle financier to having a comprehensive product portfolio across retail and corporate segments, similar to other large private banks.

The brokerage expects low-cost deposits to increase going ahead as the bank benefits from increasing dominance with home markets and higher cross sell with vehicle finance/rural customers.

IndusInd stock was 1.56% up on Friday, at Rs 1,340.35.

There have been talks of a merger of IndusInd Bank with Bharat Financial Inclusion while the management of Bharat has said that it is looking to grow business relationship with the private lender.