Strong CASA & Loan Growth
IndusInd Bank (IIB), yet again, delivered a top quartile performance across parameters. Net profit grew by 25% YoY and stood at Rs 936 crs. Loan book grew at 25% YoY. The ratio of corporate to consumer loans stood at 52:48.
Healthy business growth:
Advances recorded a steady growth of 25% YoY , while deposits grew by 23% YoY. Consumer finance growth stood at 24% YoY & 6% QoQ and corporate loan book grew at 26% YoY & 6% QoQ. On the deposits front, the CASA grew above industry at 42% YoY and stood at Rs 62,616 cr. In the current quarter bank added 70 branches and 16 ATM’s taking the total no. of branches to 1320 and total number of ATMs to 2162.
Strong earnings growth:
NII growth for the quarter stood at 25% backed by lower cost of deposits. Other income grew at 17% YoY and stood flat on sequential basis. RoA increased at 1.96% with RoE increased to 16.96% vs. 16.48% on sequential basis. C-I ratio increased to 45.98% vs. 45.7% QoQ.
Net Interest margin stood steady at 4.0%. The yield for consumer finance stood at 14% YoY while that for corporate book stood at 8.96%.
Asset quality for the bank deteriorated with GNPAs at 1.16% levels and NNPAs at 0.46% for the quarter, against 0.46% and 0.44% in the previous quarter. Low exposure to stressed assets, diversified and granular book & smaller restructured book (15 bps) restores comfort on asset quality. Provision coverage ratio stood steady at 60%. Restructured advances for the quarter stood at 0.15%.
Valuation & Outlook:
Indusind Bank has continued to show sustained progress across all vectors. At current growth rates bank will achieve Phase-4 targets well in time. At CMP of Rs.1,709 the stock is trading at 3.7(x) its FY 19E ABV. We have HOLD rating with a price target of Rs 1,875 based on 4.1(x) its FY 19E ABV.
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