Buy IndusInd Bank, target Rs 1,966: HDFC Securities

HDFC Securities has a buy call on IndusInd Bank with a target price of Rs 1,966.

The current market price of IndusInd Bank is Rs 1,820.

Time period given by the brokerage is one year when IndusInd Bank price can reach the defined target.


Investment rationale by HDFC Securities:
Divergence in asset quality coupled with subdued fees (+12 per cent YoY, a multi-quarter low) marred an otherwise robust show for IIB. Broad based growth (+28 per cent), controlled opex (11/2 per cent YoY/QoQ) and robust CASA accretion (CASA Ratio +870bps YoY) were heartening. The sequential uptick in corp yields (+11bps, a pleasant surprise) balanced out the retail drop (17bps) and kept NIMs stable at 3.97 per cent. IIBs ability of consistently beating daunting targets and precise execution capabilities drive our constructive thesis. We believe IIB (along with a few other large private banks) is well positioned to capture market share ceded by the PSBs and deliver robust growth in the near future. Additionally, the managements focus on widening product offerings by creating (or acquiring) financial service subs will create long term wealth. The impending merger with BFI will further boost return ratios.