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IndusInd Bank continued with its double digit growth momentum; Buy for medium to long term

Suhani Adilabadkar | 23 Oct, 2017  | Follow Author | Add to my Favourites 
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INDUSIND BANK continued with its double digit growth momentum with PAT & Net Interest Income both rising by 25% YOY. Net Interest Income, difference between interest earned and expended was at Rs. 18210 Mn in Q2 FY18 against Rs. 14600 Mn same period previous year with 3% sequential growth. PAT with similar yearly growth stood at Rs. 8800 Mn in the current quarter compared to Rs. 7040 Mn corresponding quarter previous year. Net Interest Margin (NIM) was well maintained at 4% similar to the previous four quarters. Gross NPAs and Net NPAs stood at 1.08% and 0.44% in Q2 FY18 compared to 0.90% & 0.37% respectively same period previous year. Both GNPAs & NNPAs were almost constant sequentially in the current September quarter. One basis point is equal to 0.01%. Provisions & contingencies have improved sequentially yet again by 5% whereas yearly jump has been 37%. Provisions & Contingencies were reported at Rs. 2938 Mn against Rs. 2139 Mn same period previous year. Double digit growth continued for all segments with Other banking business leading with 68% YOY growth. Retail outpaced Corporate growing at 20% where as Wholesale or corporate segment jumped 12% YOY in Q2 FY18. CASA ratio stood at 42.30% rising 580 basis points YOY supported by savings accounts which doubled YOY. In absolute terms CASA rose 46% YOY at Rs. 597750 Mn against Rs. 410340 Mn corresponding period previous year. Other income which accounts 22% of total income for the bank climbed 22% YOY in Q2 FY18 and stood at Rs. 11876 Mn growing 2% QOQ. Core fee maintained its growth momentum of 23% yearly & 4% sequential growth at Rs. 10130 Mn. Deposits grew at a higher rate of 26% & Advances a tad lower at 24% YOY.

IndusInd Bank has announced its merger with Bharat Financial on 14th October 2017. The merger is expected to yield synergies with respect to cost of funds, higher customer base, monetize excess priority sector loans, efficient asset utilization, enhanced branch network and higher net worth. With double digit profitability growth, declining provisions, higher CASA, credit growth above industry average, strong core fee and Bharat Financial Inclusion in its stable, IndusInd Bank has fortified its position in private sector banking. Thus, we recommend BUY for the stock for medium and long term investment.

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About Suhani Adilabadkar

Suhani Adilabadkar is a Research Analyst registered with SEBI ((INH200003240)) She has done PGDBA (Finance), MS (Finance) and a Fellowship from Insurance Institute of India. She maintains a blog where she publishes research reports across industries -

For more information please write in to [email protected]

Disclaimer: The author has taken due care and caution to compile and analyse the data. The opinions expressed above are only the views of the author, and not a recommendation to buy or sell. Neither the author nor accept any liability whatsoever arising from the use of any of the above contents.

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