Buy IndusInd Bank Ltd For Target Rs. 1,300 - Motilal Oswal
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Business growth picks up sequentially; CASA mix at 42.8%
IIB released its quarterly update, highlighting key business numbers for 4QFY22. Following are the key takeaways:
Net advances picked up and grew ~12.6% YoY to ~INR2.4t. Loan growth improved sequentially to 4.7% QoQ (v/s +3.5% QoQ in 3QFY22). The CD ratio for the bank improved to 81.5% (up ~120bp).
Deposit growth came in at a modest 3.1% QoQ (up 14.6% YoY to ~INR2.9t). Within deposits, CASA/term deposits grew 4.8%/1.9% QoQ (up 17.7%/12.4% YoY). The CASA mix improved by 60bp QoQ to 42.8%.
Growth in Retail/Small Business deposits picked up and grew 6.1% QoQ to INR1,205b. The management remains focused and is making consistent progress on shoring up its Retail deposit mix. Currently, Retail/Small Business deposits constitute ~41% of total deposits (v/s 37.4% in FY21).
IIB reported a sequential pickup in loan growth. We expect these trends to remain healthy and is likely to support margin. Deposit franchise is improving steadily, with gradual traction in ramping up of Retail deposits. Improvements in asset quality, particularly in the MFI book, will be a key monitorable. We maintain our Buy rating, with a TP of INR1,300 per share (1.7x FY24E ABV).
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