IndusInd Bank Q4 Results Review - Utilisation Of Contingency Provisions Remains A Concern: Systematix

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy..Systematix Research Report.IndusInd Bank Ltd. reported Q4 FY24 profit after tax of Rs 23.5 billion which was largely in-line with estimates. However, the bank again dipped into contingent provision buffer by Rs 3 billion which is now reduced to 29 bps (% of net advances) versus 66 bps as of March 2023. Excluding the benefit from this, reported profit after tax would have been 5% lower versus our expectations. .Other key highlights were:Net Advances growth of 5% QoQ, 18% YoY was led by strong growth in retail (6% QoQ, 23% YoY) with retail mix improving by to 55.7% (+200 bps in FY24). This is in line with the bank’s Planning Cycle 6 for FY23- 26, of 18-23% loan growth and retail loan mix of 55-60%. Deposit growth of 4.3% QoQ, 14% YoY was also broadly in-line with our estimates. Going forward, the bank targets liability growth of 16-18% with higher share of re-finance in the funding mix due to tight market liquidity. Advances growth is likely to be in-line with liability growth given constraints on CDR 3) Computed net interest margin at 4.54% declined -11 bps QoQ as cost of funds increased by +28 bps QoQ while yield on funds increased by +14 bps QoQ. Funding cost were impacted by higher borrowings (+18% QoQ) which were done to offset the impact of reduction in Rs 40 billion of individual retail deposits on exit of a large fintech partner. FY25 NIM to be in the range of 4.2-4.3% (versus 4.26% reported NIM in Q4.CIR increased to 49% (+91 bps QoQ) due to lower total income and higher branch additions. However, opex/average assets remained largely stable qoq at 3.1%.Reported Credit costs declined to 111 bps (-8 bps QoQ). However, the company again dipped into the contingent provision buffer by Rs 3 billion. Excluding this, credit costs would have been 143 bps. Outstanding contingent buffer is now reduced to 29 bps (% of net advances) versus 66 bps as of March 2023,FY25 return on asset guidance of 1.8-2.2% versus FY24 RoA of 1.84%..Click on the attachment to read the full report:.IndusInd Bank Q4 Results: Surge In Investment Income Boosts Profit By 15%.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

IndusInd Bank Q4 Results Review - Utilisation Of Contingency Provisions Remains A Concern: Systematix

We maintain our Buy rating and revise our target price to Rs 1,875 (from Rs 1,900 earlier) with target multiple of 1.8 times March-26 adjusted book value per share

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