Bucking the trend of widespread selling, shares of IndusInd Bank jumped over 5% in intraday trade on BSE on September 14.
The stock opened at ₹1,143.05 against the previous close of ₹1,164.20 and touched the high of ₹1,225 in intraday trade. The stock finally closed 4.48% higher at ₹1,216.40.
The stock is up 37% this year so far against a nearly 4% gain in the benchmark Sensex.
Brokerage firm Nirmal Bang said IndusInd Bank remains attractive despite the run-up in the stock post Q1FY23 earnings.
The broking firm has a 'buy' call on the stock with a target price of ₹1,412 implying a 24% upside.
"The bank is well positioned to benefit from the upcycle in some of its key domains (micro-loans and CVs). New retail-centric initiatives outside these segments are also showing healthy results, such as in non-MFI unsecured lending and home loans," Nirmal Bang said.
"Overall loan CAGR is expected at 16% over FY22-25E. Faster growth in high-margin retail products is expected to support the management’s NIM guidance of 4.15-4.25% despite the relatively lower EBLR linkage. The bank has improved its liability profile, with retail deposits now accounting for 41% compared to 31% in FY20," the brokerage firm added.
The bank has planned a few more initiatives which are expected to support the further realization of the liability profile.
The brokerage firm said the bank’s asset-side construct is supportive of its strategy to offer higher deposit rates.
Credit cost is expected to decline from the level seen in FY21/FY22 to a more normalised level of 150-160bps, driven by improving collections in its key segments.
"We expect the bank to clock earnings CAGR of 29% over FY22-25E and deliver ROA/ROE of 1.8%/15.6% by FY25E. We rollover valuation basis to H1FY25E and value the stock at ₹1,412 (1.7 times ABV)," said Nirmal Bang.
According to a MintGenie poll, an average of 43 analysts have a ‘strong buy’ call on the stock.
Disclaimer: The views and recommendations given in this article are those of the broking firm. These do not represent the views of MintGenie.
