Broker’s call: IndusInd Bank (Buy)

Posted on by

Target: ₹2,000

CMP: ₹1,566.15

We met Sumant Kathpalia, MD and CEO of IndusInd Bank, to discuss the progress on the Bank’s Planning Cycle 6 and its strategy to deliver sustainable and profitable growth. He reiterated the bank’s unwavering focus on building a strong retail liability franchisee (add more than 1,000 branches), balanced credit portfolio mix with a higher share of AHL/SME/Cards, micro-banking vs. micro-finance and, thereby, sustainable RoAs (1.8-2.2 per cent).

The bank is keen on building a strong wealth management business, including AMC, and remains open to the inorganic route. Sumant is keen on full-term extension beyond Mar-25, while the bank has appropriate succession planning in place across the top and middle management to avoid any business disruption.

We have raised our earnings estimates by 1-4 per cent over FY24-26, factoring better growth/lower LLP and expect the bank to deliver healthy RoA @1.9-2 per cent/RoE at 16-18 per cent RoE. Factoring in better earnings/RoE trajectory and margin stability amid the risk of contraction among peers, we upgrade the TP to ₹2,000/share from ₹1,825/share, rolling forward its P/ABV on 2.1x Dec-25E ABV vs. 2x Sep-25 earlier.