I-Sec downgrades IndusInd Bank to Reduce, lowers target price to Rs 850

ICICI Securities has downgraded IndusInd Bank to a reduce (from a Buy earlier) with a target price of Rs 850 (earlier Rs 1,350). The current market price of IndusInd Bank is Rs 720.5. IndusInd Bank, incorporated in 1994, has a market cap of Rs 70153.60 crore).

IndusInd Bank's 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-2024.

Financials

For the quarter ended 31-12-2024, the company has reported a Consolidated Total Income of Rs 15155.80 crore, up 1.91% from last quarter Total Income of Rs 14871.25 crore and up 8.50% from last year same quarter Total Income of Rs 13968.17 crore. The bank has reported net profit after tax of Rs 1402.33 crore in the latest quarter.

Investment Rationale

ICICI Securities sees heightened uncertainty in the near term on likely kitchen sinking, and the probable names for the MD & CEO candidature. In the near term, they believe the bank could enter soft growth patch along with bias on prudence. The brokerage cut growth estimates to 9% YoY (vs. ~13% YoY) for FY26E. They pruned their FY25/26/27 PAT estimates by 4/7/8%. I-Sec downgraded the stock to REDUCE (from Buy) with a revised target price of Rs 850 (Rs 1,350), valuing the stock at ~0.9x FY26E ABV. The risks include better-than-expected growth; and seamless management transition.

Promoter/FII Holdings
Promoters held 16.29 per cent stake in the company as of 31-Dec-2024, while FIIs owned 24.74 per cent, DIIs 42.05 per cent.