IndusInd Bank hits 5-month high; regains Rs 1 trillion market cap mark

The stock was under pressure after falling 34 per cent between August 3, 2018 and October 31, 2018, on concerns over its exposure to the IL&FS Group

Shares of IndusInd Bank are trading higher for the third straight day, hitting five-month high of Rs 1,685, up 3 per cent on the BSE, in intra-day trade on Thursday in an otherwise range-bound market. The stock was trading at its highest level since October 16, 2018.

In the past three trading days, the stock has rallied 11 per cent, as compared to 2 per cent rise in the S&P BSE Sensex. It recovered 26 per cent from its 52-week low level of Rs 1,334 on October 31, 2018. Boosted by continuous rally in stock, the market valuation of IndusInd Bank regained the Rs 1 trillion-mark today.

The stock was under pressure after falling 34 per cent between August 3, 2018 and October 31, 2018, on concerns over its exposure to the cash-strapped Infrastructure Leasing & Financial Services (IL&FS) Group.

Analysts at Equirus Securities have ‘overweight’ rating on the stock and believe that IndusInd Bank can continue to deliver a strong operating performance as there are limited active lenders in corporate banking and competitive intensity eases in the vehicle finance space.

The bank’s exposure to the IL&FS group is expected to slip into non-performing assets (NPA), leading to a deterioration in its asset quality next quarter. Management expects up to an Rs 1,000 crore hair-cut on the total exposure to IL&FS. However, given the bank’s negligible stressed pipeline on the corporate side (barring IL&FS) and low risk on its vehicle-finance portfolio, we expect its asset quality to improve from Q1FY20, analysts at Anand Rathi Share and Stock Brokers said in Q3FY19 result update.

At 11:10 am, IndusInd Bank was quoting 2.7 per cent higher at Rs 1,680 on the BSE, with Rs 1.01 trillion market capitalisation. In comparison, the S&P BSE Sensex was up 0.17 per cent at 37,797 points.