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Wednesday, 3 August 2016


Yet, another Blockbuster performance by IndusInd Bank, one of the leading star performers of Indian private banking sector. IndusInd has become synonymous with double digit growth. As expected, Net Profit, Net Interest Income, deposits and advances all reported double digit growth rates. Net Interest Income, difference between interest earned and expended was at Rs. 13564 mn up by 38% YOY. Net Profit too zoomed 26% YOY at Rs.6614 mn in the current June quarter. Net Interest Margin at 3.97% completed the picture with 29 basis points jump buttressing the bank’s profitability in the present volatile scenario. Asset quality is stable with Gross NPAs and Net NPAs at 0.91% and 0.38%, rising by 4 bp and 2 bp respectively QOQ. Provisions & contingencies have risen considerably, 8% QOQ and almost doubled to Rs. 2305 mn compared to corresponding period previous year. Double digit growth rate is visible in all business segments except treasury, retail segment (23%) which constitutes 51% of the total revenue followed by other banking business (31%) and corporate (18%). Low cost funding CASA declined by 30 basis points YOY in the present June quarter which is a concern area for the bank. Other income which accounts for 23% of the total income for the bank climbed 28% YOY in Q1 FY17. Growth momentum continued for core fee with yearly growth of 23%. Deposits and Advances grew parallely at 30% growth rate YOY in Q1 FY17. Unpredictable Fed moves, China & Europe slowdown and now Brexit has kept equity investors on tenterhooks. Thus with uncertainty being the new norm, Indian Private sector offers ray of hope for value investors.  IndusInd bank with CAR of 15.42% (Tier I-14.81%), credit growth rate above industry average, growing profitability and stable asset quality is poised for high growth as one of the major players in Indian banking industry. Thus ‘BUY’ signal is recommended for the stock with the target price of Rs.1280 for medium and long term investment.  


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