The share price of IndusInd Bank jumped over 4 percent on Monday after the bank announced that its net advances rose more than 4 percent to Rs 2 lakh crore on a YoY basis. However, on a sequential basis, the net advances of the lender contracted 3.1 percent.
Meanwhile, deposits stood at Rs 2.11 lakh crore in Q1 FY21, up 6 percent from Rs 2 lakh crore in Q1 FY20, the lender said in a quarterly update. Retail deposits and deposits from small business customers amounted to Rs 67,318 crore in Q1 FY21, or 31.8 percent of the total deposits reported during the quarter, it added.
CASA ratio stood at 40.2 percent in Q4 as against 43 percent in the year-ago period.
In a recent report, Jefferies said that the lender's recent trends on micro, CV loans and retail deposits look encouraging. Better scale-up of CASA and cost control could drive earnings upside, it added. Jefferies also noted that the firm's consolidation over FY21-22 may be similar to ICICI Bank's in FY09-11 as price and valuations are showing a similar pattern.
The brokerage has a 'buy' call on the stock and raised its target to Rs 620 per share from Rs 520 earlier as valuations look attractive at current levels, it said.
UBS in an earlier report had said that the lender has a relatively higher exposure to vulnerable corporates, at 24.7 percent of total loans. It has a 'sell' rating on IndusInd due to weakening profitability and asset-quality risks.
The stock has recovered, gaining over 19 percent in the last 1 month. It has declined 6 percent in 2020 YTD. It is the worst-performing stock on the Nifty Bank index for 2020 due to exposure to vulnerable corporates.
In comparison, the Nifty Bank has gained 6 percent in the last 1 month but lost over 30 percent YTD. Meanwhile, benchmark Nifty has gone up 6 percent in the last one month and fallen 11 percent YTD.
For Q4, the lender reported better than expected results. While IndusInd Bank’s net profit in Q4FY20 fell 16.17 percent year-on-year (YoY) basis to Rs 301.84 crore, the lender's operating performance improved led by a rise in net interest income (NII) and net interest margin (NIM).
On asset quality front, gross NPA during the quarter rose 12.4 percent to Rs 5,146.74 crore as against Rs 4,578.43 crore in the previous quarter. Net NPA declined 13.2 percent to Rs 1,886.58 crore from Rs 2,173.3 crore, QoQ. GNPA ratio increased to 2.45 percent versus 2.18 percent while net NPA came in at 0.91 percent versus 1.05 percent, QoQ.