Buy IndusInd Bank, target Rs 2150: Motilal Oswal Securities
Buy IndusInd Bank Ltd. at a price target of Rs 2150.
By ETMarkets.com | Updated:
Motilal Oswal Securities has a buy call on IndusInd Bank Ltd. with a target price of Rs 2150. The current market price of IndusInd Bank Ltd. is Rs 1896.85 Time period given by analyst is year when IndusInd Bank Ltd. price can reach defined target.
IndusInd Bank Ltd., incorporated in 1994, is a banking company with a market cap of Rs 112710.45 crore.
Investment rationale by Motilal Oswal: Expect RoA/RoE to recover to 2.2%/20.3% by FY20 After successfully completing three planning cycles, IndusInd Bank (IIB) has now entered the fourth planning cycle (FY18-20). Besides delivering healthy profitability and gaining market share in the existing businesses, it intends to further develop its long-cherished livelihood financing theme in this cycle.
IIB has already taken a first step toward this by announcing a merger with its business correspondent (BC) partner, Bharat Financial Inclusion (BHAFIN). It will be able to leverage BHAFIN’s rural network, and thus, provide last-mile financing to villages without incurring additional cost.
We expect IIB to report healthy acceleration in earnings over FY18-20 (as the impending merger with BHAFIN gets concluded) and project RoA/RoE of 2.2%/20.3% in FY20. Our forecasts are premised on expectations of steady expansion in margins (FY20E: 4.7%), an improvement in the C/I ratio (by 190bp) and controlled credit cost.
We reiterate our Buy rating on IIB, with a target price of INR2,150 (3.8x FY20E ABV).
IndusInd Bank Ltd., incorporated in 1994, is a banking company with a market cap of Rs 112710.45 crore.
Investment rationale by Motilal Oswal: Expect RoA/RoE to recover to 2.2%/20.3% by FY20 After successfully completing three planning cycles, IndusInd Bank (IIB) has now entered the fourth planning cycle (FY18-20). Besides delivering healthy profitability and gaining market share in the existing businesses, it intends to further develop its long-cherished livelihood financing theme in this cycle.
IIB has already taken a first step toward this by announcing a merger with its business correspondent (BC) partner, Bharat Financial Inclusion (BHAFIN). It will be able to leverage BHAFIN’s rural network, and thus, provide last-mile financing to villages without incurring additional cost.
We expect IIB to report healthy acceleration in earnings over FY18-20 (as the impending merger with BHAFIN gets concluded) and project RoA/RoE of 2.2%/20.3% in FY20. Our forecasts are premised on expectations of steady expansion in margins (FY20E: 4.7%), an improvement in the C/I ratio (by 190bp) and controlled credit cost.
We reiterate our Buy rating on IIB, with a target price of INR2,150 (3.8x FY20E ABV).
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