IndusInd Bank gains 15% in one month; nears 52-week high on healthy outlook

The management introduced planning cycle - 6 (FY23-26) wherein they have guided for 18-23% YoY credit growth, mainly-driven by retail (55-60% proportion) and PPOP margins to be 5.25-5.75%.

Shares of IndusInd Bank hit an over three-month high of Rs 1,266.65, up 2 per cent on the BSE in Tuesday’s intra-day trade on healthy business growth outlook. The stock of private sector lender was trading at its highest level since January 2023. It had registered its 52-week high at Rs 1,275.25 on September 20, 2022.

In past one month, IndusInd Bank has outperformed the market by surging 15 per cent, as compared to 3.6 per cent rise in the S&P BSE Sensex. IndusInd Bank is a Hinduja group promoted new-age private sector bank and is the fifth largest private bank in India. Vehicle finance forms around 26 per cent of overall loans.

IndusInd Bank reported a healthy set of numbers in January-March quarter (Q4FY23) with strong growth in loan book, stable net interest margins (NIMs) and lower provisions. The bank reported a 21.3 per cent year-on-year (YoY) growth in advances, led by higher disbursement and strong growth in the consumer and corporate segments. The auto and MFI segment saw a gradual improvement and is expected to be sustainable - in upcoming quarters, analysts at KR Choksey Institutional said, and have a ‘Buy’ rating on IndusInd Bank with a target price of Rs 1,475.

While, announcing results on April 24, the management introduced planning cycle - 6 (FY23–26) wherein they have guided for 18-23 per cent YoY credit growth, mainly-driven by retail (55-60 per cent proportion) and pre-provision operating profit (PPOP) margins to be 5.25-5.75 per cent.

Focus on new business verticals (home loan) to aid business growth and gain market share. Uptick in NIMs led by higher share of retail loans including micro-finance segment and ramping up phygital distribution channels to keep CI ratio elevated for couple of quarters. However, improvement in credit cost will boost earnings growth and return ratio, according to analysts at ICICI Securities.

Higher than industry credit growth, selective lending with emphasis on high yield segments and moderation in credit cost to aid improvement in RoA to ~1.9 per cent over FY24-25E, the brokerage firm said. It retains ‘Buy’ rating on the stock with a target price of Rs 1,450 per share.

However, analysts at HDFC Securities believe that IndusInd Bank faces structural challenges in a deposit-constrained environment, translating into sub-optimal operating leverage from continued investments on both sides of the balance sheet.

Technical View

Bias: Positive

Target: Rs 1,317

Support: Rs 1,200

The stock seems to be trading on a bullish note, albeit in the overbought category on the daily chart. Among the key momentum oscillators, the 14-day RSI (Relative Strength Index) and the Slow Stochastic are in overbought zone.

On the weekly scale, the stock is presently seen testing resistance around the higher-end of the Bollinger Band at Rs 1,270. A close above the same, could lead the stock towards its next key hurdle on the monthly chart at Rs 1,317.

In case of a correction, the stock could dip towards the Rs 1,200-level or test the 20-DMA (Daily Moving Average) which presently stands at Rs 1,180.

(With inputs from Rex Cano)