Motilal Oswal Recommends This Banking Stock To Buy For 44% Return, In Near Term

Renowned brokerage firm Motilal Oswal, in its recent report, stated that the stocks of IndusInd Bank can give a return of up to 44%. The bank has shown in-line performance; while the earnings outlook improves.

Target Price

The Current Market Price (CMP) of IndusInd Bank is Rs. 904. Motilal Oswal has estimated a Target Price for the stock at Rs. 1300. The company is expected to offer a 44% upside, in 1 year.

Stock Outlook
Current Market Price (CMP)	Rs. 904
Target Price	Rs. 1300
1 year return	44.00%

Company performance

IndusInd Bank has reported an in-line operating performance, with total revenue growing 12% YoY. Loan book grew 3.5% QoQ, led by 6.5% growth in the Corporate book. GNPA/NNPA ratio moderated by 29bp/9bp QoQ to 2.48%/0.71%, while net SR book stood at 85bp of loans. IIB reported a PAT of Rs. 12.41b (7% beat; 49% YoY growth) in 3QFY22, led by an 11% YoY decline in provisions, while revenue growth stood in line. NII grew ~11% YoY to Rs. 37.94b, while other income grew 14% on healthy treasury gains. NIM improved by 3bp QoQ to 4.1%, aided by declining cost of funds, even as corporate yields fell 42bp QoQ.

Comments by Motilal Oswal

About this banking stock, Motilal Oswal said, "Asset quality ratios improved sequentially, even as stress in the MFI portfolio remained elevated. The management prudently increased coverage in the MFI business. On the business front, IIB's advances grew 3.5% QoQ and 10% YoY, largely led by the Corporate book, which grew 6.5% QoQ. The Tractor business maintained its healthy momentum at 24% YoY, while Credit Card spending grew 28% QoQ. Retail to Wholesale mix stood at 54:46. Deposit growth stood at 19% YoY, with CASA mix stable at 42.2%. We expect IIB to deliver 37% earnings CAGR over FY22-24E, leading to 16% RoE in FY24E."

About the company

Established in 1994, IndusInd Bank is a universal 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. The bank offers a wide array of products and services including microfinance, personal loans, personal and commercial vehicles loans, credit cards, SME loans. They are also a preferred banking partner for various Government entities, PSUs, and large corporates.

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Disclaimer

The above stock was picked from the brokerage report of Motilal Oswal. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article.