IndusInd Bank Q3 Results Review - Positives Priced In: Dolat Capital

Dolat Capital Report

IndusInd Bank Ltd. posted inline numbers with net interest income/profit after tax growth of 18%/17% YoY, healthy traction in retail deposits (+5% QoQ) and higher retail loan growth aiding sequentially stable net interest margin.

Beat on PAT was led by utilisation of Rs 2.2 billion contingent provisions. There is no nudge from regulator on loan-to-deposit ratio; bank will continue to maintain LDR at 86-90%.

IndusInd Bank's slippages were slightly higher at 2.2%, with some rise in delinquencies across vehicle, corporate, loan-against-property, and micro finance books.

Headline gross non-performing asset at 1.9% however was stable QoQ and benefitted from better recoveries. Management will wait for normalisation in slippage flows to start building contingent buffers.

We factor in slightly higher opex, with earnings decline of 3-5% over FY24- 26E.

While we see a healthy earnings CAGR of 18% over FY24-26E, the stock has had a sharp run-up in recent past and trades at 1.7 times Sep-25E.

We see limited upside hereon. We revise our rating to 'Accumulate' from 'Buy', with unrevised target price of Rs 1760, valuing bank at 1.8 times price-to-book value against return on asset/return on equity of 1.8%/16% for FY25E.

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