Buy IndusInd Bank for Target Rs. 1,079 - Motilal Oswal Financial Services
IndusInd Bank (IIB) released its quarterly update, highlighting the key business numbers for 4QFY23. Following are the key takeaways:
* Net advances picked up and grew 21.3% YoY to ~INR2.9t. Loan growth continued to remain healthy; loans rose 6.3% QoQ (v/s +4.9% QoQ in 3QFY23). The C-D ratio for the bank increased further to 86.2% (up 240bp QoQ).
* Deposit growth came in healthy at 3.4% QoQ (up 14.6% YoY to ~INR3.36t). Within deposits, term deposits grew 6.8% QoQ (up 20.0% YoY) while CASA deposits declined 1.3% QoQ (+7.3% YoY). The CASA mix thus declined 190bp QoQ to 40.1%.
* Growth in Retail/Small Business deposits remained healthy at +3.7% QoQ to INR1,430b. The management remains focused and is making consistent progress on shoring up its Retail deposit mix. Currently, Retail/Small Business deposits constitute 42.5% of total deposits.
* IIB continues to report a strong trend in loan growth and we expect this trend to remain healthy that is likely to keep margins stable. Deposit franchise too is growing at a steady pace, with sustained focus on ramping up of Retail deposits. Improvements in asset quality, particularly in the MFI/Restructuring book, and CV demand outlook will be the key monitorables.
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