Buy IndusInd Bank, target price Rs 1420: ICICI Securities

ICICI Securities has buy call on IndusInd Bank with a target price of Rs 1420. The current market price of IndusInd Bank Ltd. is Rs 1059.9. Time period given by analyst is one year when IndusInd Bank Ltd. price can reach defined target.
IndusInd Bank Ltd., incorporated in the year 1994, is a banking company (having a market cap of Rs 92050.51 Crore).
IndusInd Bank Ltd. key Products/Revenue Segments include Interest & Discount on Advances & Bills, Income From Investment, Interest On Balances with RBI and Other Inter-Bank Funds and Interest for the year ending 31-Mar-2021.



Financials
For the quarter ended 30-09-2021, the company reported a Consolidated Total Income of Rs 9488.06 Crore, up 1.34 % from last quarter Total Income of Rs 9362.76 Crore and up 8.66 % from last year same quarter Total Income of Rs 8731.52 Crore. The bank reported net profit after tax of Rs 1146.73 Crore in latest quarter.

Investment Rationale
IndusInd Bank (IIB), through a press release and conference call, has denied allegations regarding loan evergreening in Bharat Financial (BFIL) stating they are grossly inaccurate and baseless. While it reiterated its stance of a strong governance and control framework, MFI delinquency and credit cost behaviour will be keenly watched out. Another monitorable will be any management change at BFIL. Mr. MR Rao now acts as an advisor after stepping down from BFIL’s Non- Executive Vice-Chairmanship. Denying media reports regarding other BFIL exits, management stated it has not received any more senior management resignation for now. It also admits of some technical glitch in May’21 wherein loans were disbursed without customer consent, though was rectified expeditiously and now all loans are disbursed through biometric authorisation. This development may have an interim overhang, though the management maintains its guidance of i) 6-8% MFI credit cost in FY22, ii) 1.6-1.9% overall bank credit cost (excluding provision on Vodafone); and iii) 2-year loan growth target of 16-18%. Its ability to deliver >5% PPoP/loans, >1.8% RoAs and 15% RoEs remains intact. The brokerage maintains BUY with an unchanged target price of Rs1,420.


Promoter/FII Holdings
Promoters held 16.54 per cent stake in the company as of 30-Sep-2021, while FIIs owned 51.44 per cent, DIIs 18.96 per cent.