Credit Suisse retains 'outperform' on IndusInd Bk on robust growth outlook

IndusInd Bank emerged as the top Sensex gainer in Friday's early deals, with the shares surging 3.5 per cent to Rs 1,147 per share on the BSE. In comparison, the benchmark S&P BSE Sensex index was up 0.4 per cent at 9:40 AM.

Global brokerage Credit Suisse has maintained 'outperform' rating on the stock with a target price of Rs 1,280 as it believes the bank is well capitalised to drive future growth prospects.

"As the bank is well capitalised, we expect it to achieve loan growth of over 20 per cent in fiscal year 2022-23 (FY23). Given this, the bank seems on course to achieve return on equity (RoE) of around 15 per cent in FY23 as credit costs moderate," it said in its report dated September 9.

Back home, domestic brokerage Anand Rathi said the bank's credit growth and profitability is expected to be strong on account revived demand in MFI and vehicle finance.

"On IIB's good disbursement in vehicle and MFI books in June quarter of FY23 (Q1FY23), we expect the traction to continue as both industries are experiencing revived demand. Corporate credit is expected to pick up on the government's infra push till the 2024 general elections. We expect overall credit growth to continue strong in the medium term," it said in a recent report.

Further, in the rising interest-rate context, the brokerage said net interest margin (NIM) is expected to hold above 4 per cent. "Higher margins and the expected moderation in operating expenses would keep operating profits strong. On the good operating performance, a pick-up in business growth and the benign credit-cost cycle, profitability is expected to be robust. We estimate a 1.7 per cent return on assets (RoA) each for FY23 and FY24," it added.

The brokerage has a 'buy' rating on the stock with a target price of Rs 1,300, translating into an upside of around 17 per cent from current levels. 

During the June quarter of FY23, IndusInd Bank reported a 64.44 per cent year-on-year (YoY) rise in standalone net profit at Rs 1,603.29 crore compared with Rs 974.95 crore in the corresponding quarter last year. Interest income for the quarter rose 8.01 per cent YoY to Rs 8,181.77 crore from Rs 7,574.70 crore.