Buy IndusInd Bank Ltd For Target Rs.1,300 - Motilal Oswal Financial Services
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Loan growth remains healthy; CASA mix improves to 43.2%
IIB released its quarterly update, highlighting key business numbers for 1QFY23. Following are the key takeaways:
* Net advances picked up and grew 18.4% YoY to ~INR2.5t. Loan growth continued to remain healthy and improved 4.4% QoQ (v/s +4.6% QoQ in 4QFY22). The CD ratio for the bank improved further to 82.3% (up 93bp).
* Deposit growth came in at a modest 3.2% QoQ (up 13.3% YoY to ~INR3.0t). Within deposits, CASA/term deposits grew 4.2%/2.5% QoQ (up 16.2%/11.1% YoY), respectively. The CASA mix improved 40bp QoQ to 43.2%.
* Growth in Retail/Small Business deposits remained modest and improved 3.0% QoQ to INR1,241b. The management remained focused and has been making consistent progress in shoring up its Retail deposit mix. Currently, Retail/Small Business deposits constitute ~41% of total deposits.
* IIB continued to report a strong pick-up in loan growth and we expect this trend to remain healthy which is likely to support margins. Deposit franchise is growing steadily, with sustained focus in ramping up of Retail deposits. Improvements in asset quality, particularly in the MFI book, and CV demand outlook will be the key monitorables. We maintain our BUY rating with a TP of INR1,300 (premised on 1.7x FY24E ABV).
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