MOSL: INDUSIND BANK (Buy)-Operationally on track; asset quality overhang remains
INDUSIND BANK: Operationally on track; asset quality overhang remains
(IIB IN, Mkt Cap USD13.3b, CMP INR1627, TP INR2100, 29% Upside, Buy)
- IIB’s PAT grew by a muted 5% YoY to INR9.2b in 2QFY19 due to contingent provision of INR2.8b (toward infra group). NII rose 21% YoY, while the NIM moderated 16bp YoY on account of higher funding cost.
- Total income grew by just 17% YoY due to muted income growth (+11% YoY) on account of weak treasury gains. Core fee increased 20% YoY, led by distribution income growth of 18%. Controlled opex growth of 11% YoY enabled 22% YoY growth in PPoP (30% YoY growth in core PPoP).
- Loan growth stood at 32% YoY, led by robust growth in the corporate segment. Consumer portfolio grew 29% YoY (+6% QoQ), led by strong traction in CV loans, equipment financing and credit card segments. Share of retail loans to total book stands at 39% (45% incl. business banking).
- GNPA/NNPA increased 2.3%/3.3% QoQ. IIB sold INR1b of loans to ARCs. Restructured advances worth INR1.1b were mainly due to Kerala floods. GNPA/NNPA ratios were in control at 1.09%/0.48% (-6bp/-3bp QoQ).
- Other highlights: (1) Robust CASA accretion continued with 27% YoY SA growth. (2) Tier-1 ratio declined 43bp QoQ to 13.9% (CET1: 12.8%).
IndusInd Bank's business lines include Corporate Banking, Retail Banking, Treasury and Foreign Exchange, Investment Banking, Capital Markets, Non-Resident Indian (NRI) / High Networth Individual (HNI) Banking, and (through a subsidiary) Information Technology. Co. provides multi-channel facilities including ATMs, Net Banking, Mobile Banking, Phone Banking, Multi-city Banking and International Debit Cards. Co. is part of Reserve Bank of India's Real Time Gross Settlement (RTGS) system. Co. has approximately 150 ATMs of its own, and has concluded multilateral arrangements with other banks with a total network of 15,000 ATM outlets.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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