Buy IndusInd Bank: Morgan Stanley Research,

IndusInd Bank (INBK.BO)
Research Tactical Idea
We believe the share price will rise relative to the country index over the next 45 days.
While the stock has been a strong performer, we believe there is more room for upside given that margin progression is
surprising to the upside. We were factoring in NIM compression (from 1Q level of 3.3%) as short rates in India had
increased. However, pricing power in India has surprised us positively. This, coupled with CASA traction, is offsetting
headwinds from funding costs (See our note from today "Upgrading to OW on Stronger Margin Outlook"). We expect the
bank to deliver 30% volume growth. Strong asset quality and Tier I capital of 13.5%+ (following capital raise) positions it
well. In the Indian banks' current sweet spot, IndusInd could continue to deliver on these targets, which we believe will
likely keep the stock strong.
We estimate that there is about a 60% to 70% or "likely" probability for the scenario.
Estimated probabilities are illustrative and assigned subjectively based on our assessment of the likelihood of the
scenario.
Stock Rating: Overweight
Industry View: In-Line