Motilal Oswal Reiterates BUY On Banking Stock With Rs 1600 Revised TP, Scrip Hit New 52-Week High

IndusInd Bank jumped 2.07% today, hit new 52-week high at Rs 1443.35 per share on BSE as reported in-line 1QFY24 performance with PAT up 30% YoY. Following a healthy Q1FY24 number, leading broking firm Motilal Oswal Financial Services reiterates its Buy on IndusInd Bank with a revised target price of Rs 1600 per share. The stock, with the given target price likely to give a decent 13% return if purchased at the current market price.

Earnings in line; growth outlook remains healthy

According to Motilal Oswal, IndusInd Bank (IIB) reported an in-line 1QFY24 performance with PAT at INR21.2b (up 30% YoY), aided by healthy NII growth (up 18% YoY) and lower provisions (down 21% YoY). Loan growth was healthy at 22% YoY to INR3.0t with traction in both Corporate and Consumer Finance books. Within the consumer book, growth was broad-based, with notable outperformance in the utility vehicles (up 44% YoY) and credit cards segments (up 39% YoY). MFI loans was flat sequentially, due to the seasonality of business and Q1 generally being a weak quarter.
Fresh slippages declined 14% QoQ to INR13.8b (2.0% annualized). This decline was primarily driven by a reduction in slippages within the corporate book, which decreased to INR0.4b from INR2.6b in 4QFY23. GNPA/NNPA ratios improved 4bp/1bp QoQ to 1.94%/0.58%. Restructured book declined to 0.66% in 1QFY24 from 0.84% in 4QFY23. Management suggested for 18-23% loan growth under Planning Cycle 6 (PC6), while moderation in credit cost is expected to aid RoA expansion.

Buy for a revised TP of Rs 1600

"We estimate IIB to deliver ~27% earnings CAGR over FY23-25, while its RoA/RoE would expand to 2.1%/17.5%. We reiterate our BUY rating with a revised TP of INR1,600 (premised on 1.7x FY25E ABV). "We estimate PAT to report a 27% CAGR over FY23-25, leading to a 17.5% RoE in FY25. We reiterate our BUY rating with a revised TP of INR1,600 (premised on 1.7x FY25E ABV)," the brokerage has said.

Stock Movement

On Wednesday, the stock ended at Rs 1419.10 per share, up Rs 28.80 or 2.07% from its previous close of Rs 1,390.30 per share. It hit new 52-week high on July 17, 2023, at Rs 1443.35 per share. Its 52-week low is Rs 840 per share, recorded on July 19, 2022.

It jumped 3.48% in 1 week. It gave 9.06% return in 1 month, and 26.71% in 3 months, respectively. It gave 63.40% return in the past 1 year. In 2 years, it gave 39.70% return. In 3 years, it gave 172.48% return. It has fallen 24.88% in 5 years.

Disclaimer - The stock has been picked from the brokerage report of Motilal Oswal Financial Services. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.