Motilal Oswal Bets On This Large-Cap Banking Stock For Robust 57% Gains, Loan Growth Remains Healthy

Stock outlook

The Current Market Price (CMP) of the IndusInd Bank on NSE is Rs 832/share. It was opened at Rs 807.20 and closed at CMP after gaining 3.07% from the previous close. The 52-week low of the stock is Rs 763.20/share, recorded on 23 June 2022, last month. While the 52-week high recorded on 28 October 2021 is Rs 1,242/share. The market cap of the IndusInd bank is Rs 64,103.38 crore. Considering the CMP and the Target price, estimated by Motilal Oswal, investors can expect a robust 57% of gain in 12 months.

Note- It has given negative returns in past 1 & 5 Years.

Loan growth remains healthy; CASA mix improves to 43.2%.

Net advances picked up and grew 18.4% YoY to ~Rs 2.5t. Loan growth continued to remain healthy and improved 4.4% QoQ (v/s +4.6% QoQ in 4QFY22). The CD ratio for the bank improved further to 82.3% (up 93bp). Deposit growth came in at a modest 3.2% QoQ (up 13.3% YoY to ~Rs 3.0t). Within deposits, CASA/term deposits grew 4.2%/2.5% QoQ (up 16.2%/11.1% YoY), respectively. The CASA mix improved 40bp QoQ to 43.2%. Growth in Retail/Small Business deposits remained modest and improved 3.0% QoQ to Rs 1,241b. The management remained focused and has been making consistent progress in shoring up its Retail deposit mix. Currently, Retail/Small Business deposits constitute ~41% of total deposits.

Motilal Oswal Suggests Buy for Target Price of Rs 1,300/share

According to Motilal Oswal, "IndusInd Bank continued to report a strong pick-up in loan growth and we expect this trend to remain healthy which is likely to support margins. Deposit franchise is growing steadily, with sustained focus in ramping up of Retail deposits. Improvements in asset quality, particularly in the MFI book, and CV demand outlook will be the key monitorables. We maintain our BUY rating with a Target Price of Rs 1,300 (premised on 1.7x FY24E ABV)."

About - IndusInd Bank

IndusInd Bank is one of India's largest private sector bank with a widespread banking footprint with over 2.5 crore customers, over 5,000 distribution points and nearly 2,000 branches across the country. With 'Sustainability' at the core, the bank offer a wide array of products and services for individuals and corporates including microfinance, personal loans, personal and commercial vehicles loans, credit cards, and SME loans. The bank is also a preferred banking partner for various Government entities, PSUs and large corporates. The Bank's business lines include corporate banking retail banking treasury and foreign exchange investment banking capital markets non-resident Indian/high-net-worth individual banking and information technology.