Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Buy
IndusInd Bank (INBK.BO)
Return Potential: 41% Equity Research
Risk assessment allays concerns on sustainability; reiterate CL-Buy
Source of opportunity
IndusInd Bank has been on our Conviction Buy list since September 1, 2010.
While it has appreciated significantly over the last 1 year/2 years by
34%/404%, respectively, we maintain the stock is a good long-term buy as
the bank now focuses on expansion post restructuring. In this report we try
and address three key areas of concern: (1) growth as CV cycle slows - we
believe an expanding product profile will provide a buffer, (2) rising NPLs as
interest rates rise – we expect this to be manageable given secured lending,
and (3) expense ratios rising with network – our estimates are higher than
guidance but we see potential positive surprise.
Catalyst
We do not currently have sufficient visibility to factor in all moving
parts/variables and hence earnings could potentially surprise on the
upside. This could come from: (1) higher fees as the bank expands client
base, sells mortgage loans and earns higher investment banking fees, (2)
reduction in cost ratios, and (3) higher CASA ratio as the bank expands
branches while keeping asset growth under control.
Valuation
We maintain Buy (on Conviction Buy list) and our GS Camelot-based
target price of Rs340, implying 41% upside potential. The stock is trading
at 2.5X FY2012 P/B and 16X P/E and 2.2X FY2013 P/B and 13X P/E vs.
earnings growth of 23% (average for FY12E-FY13E). We fine tune our
FY12E-FY14E estimates.
Key risks
Frequent capital raisings, execution risk driving up cost ratios with network
expansion and slowing CV cycle impacting overall loan growth and
margin.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Buy
IndusInd Bank (INBK.BO)
Return Potential: 41% Equity Research
Risk assessment allays concerns on sustainability; reiterate CL-Buy
Source of opportunity
IndusInd Bank has been on our Conviction Buy list since September 1, 2010.
While it has appreciated significantly over the last 1 year/2 years by
34%/404%, respectively, we maintain the stock is a good long-term buy as
the bank now focuses on expansion post restructuring. In this report we try
and address three key areas of concern: (1) growth as CV cycle slows - we
believe an expanding product profile will provide a buffer, (2) rising NPLs as
interest rates rise – we expect this to be manageable given secured lending,
and (3) expense ratios rising with network – our estimates are higher than
guidance but we see potential positive surprise.
Catalyst
We do not currently have sufficient visibility to factor in all moving
parts/variables and hence earnings could potentially surprise on the
upside. This could come from: (1) higher fees as the bank expands client
base, sells mortgage loans and earns higher investment banking fees, (2)
reduction in cost ratios, and (3) higher CASA ratio as the bank expands
branches while keeping asset growth under control.
Valuation
We maintain Buy (on Conviction Buy list) and our GS Camelot-based
target price of Rs340, implying 41% upside potential. The stock is trading
at 2.5X FY2012 P/B and 16X P/E and 2.2X FY2013 P/B and 13X P/E vs.
earnings growth of 23% (average for FY12E-FY13E). We fine tune our
FY12E-FY14E estimates.
Key risks
Frequent capital raisings, execution risk driving up cost ratios with network
expansion and slowing CV cycle impacting overall loan growth and
margin.
No comments:
Post a Comment