IndusInd Bank Q1 Results Review - NIMs Remain Stable; Credit Growth Guidance Maintained: IDBI Capital

IDBI Capital Report

IndusInd Bank continues to maintain the margins at 4.3% led by mix change toward retail portfolio. Lower growth in corporate book and micro finance portfolio resulted in credit growth slowdown to 15% versus 18% (FY24).

We expect 18% CAGR (FY24-26) loan growth backed by retail portfolio. Deposit growth improved to 14.8%, however management maintained the guidance of 18-22% credit growth. MFI portfolio which remains key concern area reported rise in gross non-performing asset (at 5.2% versus 4.5% QoQ).

Profitability impacted led by higher credit cost as NPA inch up due to seasonality. Thus, We revised downwards the estimates slightly by 3% FY26 EPS.

IndusInd Bank maintains overall provision of Rs 10 billion as contingent provisions which should provide cushion to P&L from MFI NPA.

We maintain ‘Buy’ rating with a target price of Rs 1,880 (earlier Rs 1,900) at price/adjusted book value of 1.9 times FY26.

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