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IndusInd reported better‐than‐expected PAT of Rs2.23bn (up 30% YoY) led by a
beat in loan growth and stronger‐than‐expected fee income momentum. Apart
from improving profitability and strong growth, IIB continues to deliver on all its
cycle II growth strategies, and like HDFCB, is well placed to deliver strong PAT
growth in FY13. Current valuations at 3.1x FY13 book are not cheap but consistent
and all round performance inspires confidence. Hence, we maintain our ‘BUY’
rating, with a revised PT of Rs400/share.
Surprise in top‐line performance: NII was ~4% higher-than-expected due to
strong sequential loan growth (8% QoQ) and surprise in margins, with ~5bps
accretion QoQ v/s a marginal contraction expected. Fee income growth has
been exceptionally strong at ~60% YoY growth in Q4FY12, with growth across all
segments. With margins expected to improve in FY13, we believe IIB will be able
to sustain its top-line growth momentum in FY13.
Delivering on all its cycle II growth drivers: After the 08-11 growth phase,
management had laid out it’s cycle II growth drivers and we continue to see
management delivering on most counts including (1) improving liability
franchise with ~2.5% SA accretion post SA re-regulation (2) filling up the product
gap (LAP/credit cards) on the retail side and most importantly (3) gaining
significant fee income traction in personal distribution and IB business.
Strong PAT growth to sustain in FY13: With a large fixed rate asset base, we
expect margins to improve by ~15-20bps in FY13 and drive profitability
improvement. We increase FY13/14 estimates by ~7-8% on higher growth and
margins and with credit costs at ~75bps for FY13, there could be further upsides.
Maintain ‘BUY’, with a PT of Rs400/share: Current valuations at 3.1x FY13 book
are not cheap but high loan growth, strong fee income momentum and very
limited asset quality risk inspire confidence. We maintain our positive view on
IIB.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
IndusInd reported better‐than‐expected PAT of Rs2.23bn (up 30% YoY) led by a
beat in loan growth and stronger‐than‐expected fee income momentum. Apart
from improving profitability and strong growth, IIB continues to deliver on all its
cycle II growth strategies, and like HDFCB, is well placed to deliver strong PAT
growth in FY13. Current valuations at 3.1x FY13 book are not cheap but consistent
and all round performance inspires confidence. Hence, we maintain our ‘BUY’
rating, with a revised PT of Rs400/share.
Surprise in top‐line performance: NII was ~4% higher-than-expected due to
strong sequential loan growth (8% QoQ) and surprise in margins, with ~5bps
accretion QoQ v/s a marginal contraction expected. Fee income growth has
been exceptionally strong at ~60% YoY growth in Q4FY12, with growth across all
segments. With margins expected to improve in FY13, we believe IIB will be able
to sustain its top-line growth momentum in FY13.
Delivering on all its cycle II growth drivers: After the 08-11 growth phase,
management had laid out it’s cycle II growth drivers and we continue to see
management delivering on most counts including (1) improving liability
franchise with ~2.5% SA accretion post SA re-regulation (2) filling up the product
gap (LAP/credit cards) on the retail side and most importantly (3) gaining
significant fee income traction in personal distribution and IB business.
Strong PAT growth to sustain in FY13: With a large fixed rate asset base, we
expect margins to improve by ~15-20bps in FY13 and drive profitability
improvement. We increase FY13/14 estimates by ~7-8% on higher growth and
margins and with credit costs at ~75bps for FY13, there could be further upsides.
Maintain ‘BUY’, with a PT of Rs400/share: Current valuations at 3.1x FY13 book
are not cheap but high loan growth, strong fee income momentum and very
limited asset quality risk inspire confidence. We maintain our positive view on
IIB.
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