1
Please refer to important disclosures at the end of this report
1
1
IndusInd Bank Limited (IIB) is engaged in banking services.In the past three or
four years, IIB has traded at premium valuations compared to its private sector
counterparts due to a sustained and structural improvement in earnings (up 3x in
the last four years) and best in class return ratios with RoE of ~18-19% and RoA
of 1.6% in the past four years. After taking over in early 2008, the current
management has transformed IndusInd Bank (IIB) from low and volatile balance
sheet growth to steady and sustainable growth with strong profitability. We like
the fact that the transformation has been a qualitative one (RoA up from 0.3% to
1.9% as on FY17) despite the turbulent economic scenario. Loans, deposits and
PAT traction improved to 27%, 23% and 50% CAGR in FY08-17 from 12%, 13%
and -35% in FY05-08, respectively. Loan and deposit grew 24% and 31% to
`116407cr and `133673cr, respectively, as on Q1FY18. IIB maintained
calculated NIM of over 3.7% in the past while Q1FY18 NIM was maintained at
strong levels of 4%. In the past six years, reported NIM improved from 1.7% to
~4% as on FY17. IIB has fared well over the years in terms of asset quality with
the GNPA ratio improving from 3.1% in FY08 to 1% by FY11 and maintained at
0.9% now. Diversification led to a steady performance on the asset quality front.
Exposure to stressed sector like telecom or accounts referred to NCLTs is low. The
bank initiated planning cycle four for FY18-20 with focus on retail, MFI, doubling
the assets book and reaching CASA ratio of 40%. The bank is well placed to
benefit from higher business momentum maintaining stable margin & lower
capital usage, which will entail improvement in return ratios. IIB has a RoE
14.75% and is trading at a valuation P/Bv of 4.69x of FY17 earnings. Hence
BUY.
BUY
CMP `1615
1.1
Reuters Code
INBK.NS
IIB:IN
10
BSE Sensex
31,196
Nifty
9,722
Face Value (`)
Banks
Market Cap (` cr)
96,753
52 Week High / Low
1680/1037.5
Avg. Daily Volume
42,317
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Indusind Bank Ltd
Others | Banks
August 21, 2017
2
Indusind Bank Ltd |Banks
June 5, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Indusind Bank
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)