IndusInd Q3FY15 Research Report By Nirmal Bang

IndusInd Bank: CMP Rs. 821, Target Price Rs. 975, Upside: 19%

Yet Another Robust Performance

IndusInd Bank’s 3QFY15 performance was in line with our expectations. Its bottom-line grew 29% YoY on the back of a healthy operating profit growth of 20% and reasonable credit costs. Net interest income grew 18%, driven by a credit growth of 22% and stable NIM (net interest margin) of 3.7%. Non-interest income grew 27%, with higher traction witnessed in distribution fees and foreign exchange income, up 41% and 29%, respectively. Cost-to-income ratio improved 50bps sequentially to 47.4%, despite setting up of 115 new branches to touch a total of 800 branches. Loan slippage for the quarter was at a healthy level of 1%. Annualised credit costs stood at 62bps for the quarter and 52bps for the nine-month period. The management retained its credit cost guidance of 60bps for FY15. We have rolled over our valuation to FY17 estimates, valuing IndusInd Bank stock at 3.7x P/ABV FY17E earnings with a target price of Rs975 and a Buy rating on it.

Indusind Bank-3QFY15 Result Update-14 January 2015sInd