Jefferies sees double-digit upside in this banking stock, recommends buying


Private lender IndusInd Bank in its pre-quarter update posted 19 per cent year-on-year (YoY) increase in net advances at 2,71,966 crore by the end of December 31, 2022 (Q3FY23). Net deposits, too, grew 14 per cent YoY to 3,25,491 crore. Brokerage firm Jefferies assigned ‘buy’ rating to the banking stock and a price target of 1,600.

On BSE, the shares IndusInd Bank are trading 1.45 per cent down at 1222.75 apiece.

Jefferies target suggests a 23 per cent upside taking into consideration Monday’s closing print.

“IndusInd Bank’s 3QFY23 pre-quarter update shows loan growth of 19% YoY/ 5% QoQ, which we believe is led by uptick in retail loan growth (CVs and MFI) that also make better margins. Deposits growth was slower at 14% YoY/ 3% QoQ, with retail deposits and Casa deposits growing at 21%/18% YoY. We see bank moving towards c.20% loan Cagr & 2% ROA. Valuations are attractive at 1.5x FY24 adj. PB. It stays among top picks in the sector. Buy.” said Jefferies in its note.

The bank’s loan growth continues to remain healthy as it grew 4.6 per cent QoQ and up 4.9 per cent on year-on-year basis. 

While the deposit growth came in healthy at 3 per cent QoQ and up 14.3 per cent, the CASA mix declined 40bp QoQ to 42 per cent.

Retail Deposits and Deposits from small business customers amounted to Rs.1,37,968 crores as of 31 December 2022 as compared to Rs. 1,29,990 crores as of 30 September 2022.

It has a market cap of 94,813.87 crore. IndusInd Bank reported a rise of 60.4 per cent in net profit to 1786.72 cr for the September quarter. The net profit for the corresponding quarter was 1113.53 crore.

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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