IndusInd Bank shares gained over 2% intraday trade on Tuesday after the private sector lender reported robust earnings in March quarter, aided by strong loan growth and steady operating performance. The stock was the best performer in the S&P BSE Bankex index, followed by State Bank of India and Axis Bank.
IndusInd Bank exceeded the market estimates by reporting standalone net profit of Rs 2,040.51 crore in Q4FY23, an increase of nearly 50 per cent against the net profit of Rs 1,361.37 crore in Q4FY22. The private lender went on to announce an increase of near 17 per cent in its net income in Q4 results for the financial year 2022-23.
IndusInd Bank share currently trades 11.6% lower than its 52-week high of Rs 1,275.25 touched on September 20, 2022, while it is up 47.5% against its 52-week low of Rs 763.75 hit on June 23, 2022. In the last one year, the stock has given a return of 19%, while it has fallen nearly 2% in the six-month period. In the calendar year 2023, the large-cap share has shed over 8%, whereas it climbed nearly 11% in a month.
Why IndusInd Bank shares are rising?
On why IndusInd Bank shares are surging today, Shreyansh Shah, Research Analyst at Stoxbox said, “IndusInd Bank has delivered a decent performance in the fourth quarter, with good momentum seen across its businesses such as retail and corporate segments. The bank’s key metrics also showed an improving trend including NII, RoA and RoE along with better metrics on the asset quality side. We believe that the company would likely garner higher market share and manage risks through greater diversification going forward. We believe that a well-capitalized balance sheet, improvement in collection efficiencies across business segments (vehicle and MFI being the key), lower credit costs, conservative provisioning and strong focus on risk management framework would help the company to command a higher valuation multiple going forward.”
Post Q4 results, JM Financial maintain “BUY” rating on the stock but cut target price to Rs 1,375 from Rs 1,470 earlier. “IndusInd has corrected sharply given that term extension for MD & CEO has been lesser than market expectations, we believe core performance for IndusInd continues to trend in the right direction. Currently, stock is trading at attractive valuations of 1.5x FY25e BVPS (for expected RoEs of 16.7% FY25e) and hence makes for an attractive entry point. Maintain BUY with revised TP of Rs 1,375,” it said in a note.
LKP Securities have also retained “BUY” rating with price target of Rs 1,322, saying that core operating performance of the bank remains healthy. A higher contingent buffer is likely to safeguard the bank from credit disruption from various restructuring schemes, it said. The brokerage said that Q4 numbers were stable, but the spike in MFI GNPA (4.32% v/s 3.75%) and higher slippages are the biggest disappointment. The agency believes that the bank has made adequate provisioning against the potential stress. However, the delinquencies from vehicles segment and credit cost in next quarters will be keenly watched.
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