Neutral IndusInd Bank; target of Rs 1050: Motilal Oswal

Moneycontrol • 6 days ago

Original source

Key Investment Pillars

  • IndusInd Bank's operating performance is improving, with 2QFY27 RoA increasing 9bp QoQ to 0.87%, driven by healthy NII growth and strong other income.
  • The bank's business momentum is picking up, led by strong growth in commercial banking and mid-market segments, while unsecured retail book growth remains muted.
  • Deposit growth is driven by strong FCNR(B) mobilization, partly utilized to retire high-cost wholesale funding, taking the retail deposit share to 50% of total deposits.
  • The reduction in slippages is broad-based, enabling improvement in asset quality ratios, with GNPA/NNPA declining 52bp/12bp QoQ to 2.73%/0.83%.

Thesis Validation Checklist

  • Over the next ~12 months, investors should watch for signs of NIM recovery, fee income growth, and operating leverage, which are expected to drive the bank's RoA to ~1% by the end of FY27.
  • Key signals to monitor include loan growth, deposit mix, asset quality, and operating efficiency.
  • A decline in slippages and improvement in credit costs would be positive for the bank's RoA.
  • Investors should also track the bank's ability to maintain its guidance on RoA and credit costs.