IndusInd Bank Q3 Profit Jumps 68.7% YoY: Should you Buy?

On January 19, 2023, IndusInd Bank reported a ₹1,959 crore standalone profit in the third quarter (October-December) of the financial year 2023. This is a 68.7% jump in the company's year on year profit. The company also posted better-than-expected Q3 earnings.

IndusInd Bank Q3 Profit Jumps

The main reasons for better-than-expected performance are:

  • The fall in its provisions/contingencies to ₹1,065 crore in Q3 FY23. In the third quarter, this is a fall of around 36% YoY.
  • The company's net interest income in the quarter ending in December 2022 swelled to ₹4,495.3 crore. It is a growth of 18.5% YoY.
  • The quality of assets remained stable.
    • Quarter-on-quarter gross NPA (non-performing asset) improved by 5 basis points to 2.06%.
    • Net NPA for the Q3 FY23 rose 1 basis point to 0.62%.

The massive surge in the bank's profit and other parameters have put focus on the IndusInd Bank's stock price. At press time (January 20, 2023), the share price of Indusind Bank Ltd (NSE: INDUSINDBK) is hovering around ₹1,212.75. It is +1.02% above tomorrow's close.

Is this the right time for you to buy the stock? Let's explore what brokerages are saying about the Indusind Bank's recent performance and the prospect of the stock.

Views of Brokerages on Indusind Bank's Performance and the Stock's Projection

  1. Morgan Stanley

According to the research house, the third quarter of FY23 has:

  • Two positive effects:
    • Improved credit costs
    • Improved core Pre-Provision Operating Profit (PPoP)
  • Two negative effects:
    • Slower growth pickup of MFI
    • Further moderation in the SA ratio

Morgan Stanley has retained the 'Overweight' rating on Indusind Bank's stock. They have increased their target price to ₹1,525 per share.

2. Motilal Oswal

According to this brokerage, there are three positive aspects of IndusInd Bank:

  1. The operating performance of the bank is on track.
  2. Continued growth in NII.
  3. Provisions are controlled.
  4. Lower slippages have helped the quality of the asset to be steady.
  5. The management of the bank is stressing increasing loan growth's momentum. They expect the loan growth to remain at 20% by the end of the financial year 2023.

Motilal Oswal is keeping its "Buy" recommendation. Their target price of INDUSINDBK is ₹1,550.

3. Sharekhan

The positive aspects noted by this brokerage firm are:

  • IndusInd Bank Ltd has a positive stable outlook in the near term.
  • A strong momentum can be seen in the retail book.

However, Sharekhan has also pointed out a negative aspect:

  • The cost of deposits is a cause for concern.

The brokerage firm has the following observations:

  • Expectations of the MFT business to gear up are high.
  • Credit cost is expected to decrease sharply in the coming few quarters as:
    • In the coming two quarters, the restructured book will be run down fully.
    • In the MFI sector, the efficiency of collection improves.
    • In the vehicle loan sector, near-term issues get resolved.

Sharekhan is keeping its "Buy" recommendation of IndusInd shares. Their revised target price is ₹1,550.

Price Projections of Other Broking or Research Firms

  • Jefferies broking firm expects the INDUSINDBK share price to reach ₹1,600 per share. They have retained their "Buy" rating of the stock.
  • CLSA brokerage house has also retained the stock's "Buy" recommendation. They expect the IndusInd Bank's stock price to hit ₹1,500 per share.
  • Credit Suisse research firm is maintaining the stock's "Outperform" rating. Their target price is ₹1,430 per share.
  • Citi research house is maintaining a "Buy" recommendation. Their target price is also ₹1,430 per share.
  • Prabhudas Lilladher brokerage house has retained the "Buy" recommendation. They have revised their target price upwards from ₹1,450 per share to ₹1,500 per share.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

The main reasons for better-than-expected performance are:

  • The fall in its provisions/contingencies to ₹1,065 crore in Q3 FY23. In the third quarter, this is a fall of around 36% YoY.
  • The company's net interest income in the quarter ending in December 2022 swelled to ₹4,495.3 crore. It is a growth of 18.5% YoY.
  • The quality of assets remained stable.
    • Quarter-on-quarter gross NPA (non-performing asset) improved by 5 basis points to 2.06%.
    • Net NPA for the Q3 FY23 rose 1 basis point to 0.62%.

The massive surge in the bank's profit and other parameters have put focus on the IndusInd Bank's stock price. At press time (January 20, 2023), the share price of Indusind Bank Ltd (NSE: INDUSINDBK) is hovering around ₹1,212.75. It is +1.02% above tomorrow's close.

Is this the right time for you to buy the stock? Let's explore what brokerages are saying about the Indusind Bank's recent performance and the prospect of the stock.

Views of Brokerages on Indusind Bank's Performance and the Stock's Projection

  1. Morgan Stanley

According to the research house, the third quarter of FY23 has:

  • Two positive effects:
    • Improved credit costs
    • Improved core Pre-Provision Operating Profit (PPoP)
  • Two negative effects:
    • Slower growth pickup of MFI
    • Further moderation in the SA ratio

Morgan Stanley has retained the 'Overweight' rating on Indusind Bank's stock. They have increased their target price to ₹1,525 per share.

2. Motilal Oswal

According to this brokerage, there are three positive aspects of IndusInd Bank:

  1. The operating performance of the bank is on track.
  2. Continued growth in NII.
  3. Provisions are controlled.
  4. Lower slippages have helped the quality of the asset to be steady.
  5. The management of the bank is stressing increasing loan growth's momentum. They expect the loan growth to remain at 20% by the end of the financial year 2023.

Motilal Oswal is keeping its "Buy" recommendation. Their target price of INDUSINDBK is ₹1,550.

3. Sharekhan

The positive aspects noted by this brokerage firm are:

  • IndusInd Bank Ltd has a positive stable outlook in the near term.
  • A strong momentum can be seen in the retail book.

However, Sharekhan has also pointed out a negative aspect:

  • The cost of deposits is a cause for concern.

The brokerage firm has the following observations:

  • Expectations of the MFT business to gear up are high.
  • Credit cost is expected to decrease sharply in the coming few quarters as:
    • In the coming two quarters, the restructured book will be run down fully.
    • In the MFI sector, the efficiency of collection improves.
    • In the vehicle loan sector, near-term issues get resolved.

Sharekhan is keeping its "Buy" recommendation of IndusInd shares. Their revised target price is ₹1,550.

Price Projections of Other Broking or Research Firms

  • Jefferies broking firm expects the INDUSINDBK share price to reach ₹1,600 per share. They have retained their "Buy" rating of the stock.
  • CLSA brokerage house has also retained the stock's "Buy" recommendation. They expect the IndusInd Bank's stock price to hit ₹1,500 per share.
  • Credit Suisse research firm is maintaining the stock's "Outperform" rating. Their target price is ₹1,430 per share.
  • Citi research house is maintaining a "Buy" recommendation. Their target price is also ₹1,430 per share.
  • Prabhudas Lilladher brokerage house has retained the "Buy" recommendation. They have revised their target price upwards from ₹1,450 per share to ₹1,500 per share.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.

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