IndusInd Bank surges 4% to highest level since Jan 2020 on healthy Q1 nos

The stock was trading at its highest level since January 2020 and has rallied nearly 30% in the past three months

Shares of IndusInd Bank rallied 4 per cent to hit the highest level in over three-and-a half years at Rs 1,443 on the BSE in Wednesday’s intra-day trade after the lender reported healthy performance for the April-June quarter (Q1FY24).

The bank reported a 32.5 per cent year-on-year (YoY) growth in its net profit at Rs 2,124 crore, backed by a 22 per cent YoY growth in advances and steady margins. The bank’s provisions for the quarter ending Q1FY24 stood at Rs 992 crore compared to Rs 1,251 crore during the same period last year.

The stock was trading at its highest level since January 2020. In the past three months, it has surged nearly 30 per cent.

Net interest income (NII) grew by 18 per cent YoY to Rs 4,867 crore. Net interest margin (NIM) for Q1 was 4.29 per cent against 4.21 per cent for Q1FY23. It was 4.28 per cent for Q4FY23. NIM expanded 1 bps QoQ, despite a rise in cost of funds led by an increase in yields driven by accretion in MFI book.

Gross non-performing asset (gross NPA) ratio, as a percentage of gross advances, was 1.94 per cent. It improved marginally from 1.98 per cent in the previous quarter and 2.35 per cent a year ago.

Analysts at ICICI Securities said that the lender's focus on improving distribution capabilities and a scale up in new segments will aid its higher than industry growth. Retail focussed approach, steady current-deposit (CD) ratio at 86-89 per cent and liabilities accretion will aid margin trajectory. Contingent buffer will keep credit cost at 1.1-1.3 per cent and thus RoA at 1.8-1.9 per cent. 

A key positive has been consistent increase in retail deposit share to 43.4 per cent vs 41.0 per cent a year ago. Earnings quality for IndusInd Bank has been improving since the past 9 quarters led by strong loan growth that was funded by granular deposits and better asset quality, which translated to lower credit costs. However, high proportion of wholesale deposits and lower buffer provisions at 56 bps leaves limited headroom for multiple expansions, said analysts at Prabhudas Lilladher in a result update.