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Nirmal Bang: IndusInd Bank - Upping Credit Cost Estimate

Nirmal Bang: IndusInd Bank - Upping Credit Cost Estimate

A guard stands at the entrance to an IndusInd Bank Ltd. branch in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)
A guard stands at the entrance to an IndusInd Bank Ltd. branch in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

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Nirmal Bang Report

We fine-tune our estimates on IndusInd Bank Ltd. further by increasing our credit cost assumptions as the management looks to strengthen its provision coverage ratio (PCR) from 67% presently in addition to shoring up Covid-19-related buffers.

Accordingly, our new credit cost estimates stand at 232/166/136 basis points for FY21/22/23E.

Consequently, our profit after tax stands revised downward by 1124% over the forecast period (FY21-23E).

Despite downgrading our earnings estimates for the bank, we remain positive on the stock.

Visibility of loan growth reverting to 15% in the medium-term backed by execution of the stated liability strategy (aiming for granularization) and subsiding of provisions form the basis of our thesis.

Click on the attachment to read the full report:

Nirmal Bang Indusind Bank-Company Update-29 September 2020.pdf

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