10 January 2013
3QFY13 Results Update | Sector: Financials
IndusInd Bank
BSE Sensex
19,664
S&P CNX
5,969
CMP: INR434
TP: INR500
Buy
Bloomberg
Equity Shares (m)
M. Cap. (INR b)/(USD b)
52-Week Range (INR)
1,6,12 Rel.Perf.(%)
IIB IN
521.8
227/4.1
441/242
3/15/52
Financials & Valuation (INR b)
Y/E March
2013E 2014E 2015E
29.0
24.3
13.6
4.0
26.0
29.9
164.4
17.0
1.7
14.6
16.7
2.6
2.7
0.7
36.1
30.7
17.1
4.1
32.7
25.8
192.3
18.4
1.8
14.6
13.3
2.3
2.3
0.9
NII (INR b)
22.4
OP (INR b)
18.1
NP (INR b)
10.5
NIM (%)
3.8
EPS (INR)
20.0
EPS Gr. (%)
16.8
BV/Sh. (INR) 142.2
ROE (%)
17.5
ROA (%)
1.6
Payout (%)
14.6
Valuations
P/E(X)
21.7
P/BV (X)
3.1
P/ABV (X)
3.1
Div. Yield (%)
0.6
IndusInd Bank's 3QFY13 PAT grew 30% YoY and 7% QoQ to ~INR2.7b (in-line with
estimates). Strong loan growth (+31% YoY), 20bp+ QoQ improvement in margin
to 3.5% and strong fee income, led to highest-ever core income and core PPP (as
a percentage of average assets) of 5.6% and 2.7% and quarterly RoA of 1.65%.
Key highlights:
Asset quality was stable (GNPA up 3% QoQ) despite recognizing one large
media account of INR1b as NPA. After valuing the securities that bank held
towards the exposure, it sold the exposure to ARC and provided ~INR400m
as provisions. Slippage ratio in consumer finance segment was stable at 2%.
Post moderation in 2QFY13, SA deposit growth bounce backed to 16% QoQ
(+55% YoY) - a positive, driving overall CASA growth (+10% QoQ and 36% YoY).
CASA ratio stood at 28.7% vs 28% QoQ.
Fall in cost of funds (down 26bp QoQ), higher funding of loans via CASA
(43%), largely stable yield on funds (down 5bp QoQ) and benefit of capital
infusion led to margin improvement of 20bp+ QoQ.
Traction in fee income remains impressive (up 32% YoY and 11% QoQ to
~INR3.3b)
Valuation and view:
With ~50% of deposits wholesale in nature, and high
proportion of fixed rate loans on the balancesheet, IIB is most leveraged to
systemic interest rates and liquidity. This coupled with recent capital infusion
would boost NIM. Improving liability franchise, structural improvement in RoA
and 20%+ asset growth should help IIB to post one of the highest PAT CAGR
(~29%) among the banks under our coverage. Maintain
Buy.
Alpesh Mehta
(Alpesh.Mehta@MotilalOswal.com) + 91 22 3982 5415
Sohail Halai
(Sohail.Halai@MotilalOswal.com) + 91 22 3982 5430
Investors are advised to refer through disclosures made at the end of the Research Report.
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