Buy IndusInd Bank; target of Rs 1100: Prabhudas Lilladher

Moneycontrol • 6 days ago

Original source

Key Investment Pillars

  • IndusInd Bank saw a good quarter with core PPoP beating estimates due to higher fees, driven by broad-based growth across retail and wholesale segments.
  • Loan growth, excluding FCNR, was healthy at 6.2% QoQ, led by corporate and rural segments, with the bank expecting to grow in line with the market.
  • The bank's CASA ratio declined to 27.9%, partly due to a fall in SA balances as certain NRE customers shifted to FCNR deposits.
  • Management expects to recoup the NIM drop over the next 2 quarters, driven by higher retail growth in H2 and optimization on the liability side.

Thesis Validation Checklist

  • Investors should watch for IndusInd Bank's ability to sustain its fee growth momentum, particularly in the face of potential regulatory changes affecting bancassurance income.
  • The bank's loan growth, especially in the corporate and rural segments, will be crucial in determining its ability to meet market growth expectations.
  • Management's ability to optimize the liability side and recoup the NIM drop will be important in maintaining profitability.
  • The impact of the IRDAI draft regulation on the bank's bancassurance income and the overall financial performance should be monitored.