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IndusInd Bank shares rise over 3% after Q1 results; should you buy, sell or hold?

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IndusInd Bank reported Q1FY22 consolidated net profit at Rs 1,016.11 crore, aided by strong retail loan growth and lower provisions.

IndusInd Bank shares rise over 3% after Q1 results; should you buy, sell or hold?
The share price of IndusInd Bank gained over 3 percent in early trade on Wednesday after the bank reported doubling of its net profit for the first quarter as compared to the corresponding quarter of last fiscal.
The private sector lender reported Q1FY22 consolidated net profit at Rs 1,016.11 crore, aided by strong retail loan growth and lower provisions. It had posted a net profit of Rs 510.39 crore in the year-ago quarter.
The bank's total income rose to Rs 9,362.76 crore from Rs 8,682.17 crore, YoY, according to a regulatory filing by IndusInd Bank.
Interest income was up at Rs 7,574.70 crore, against Rs 7,161.73 crore a year ago.
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Here's what brokerages have to say on IndusInd Bank's stock and Q1 performance:
CLSA
IndusInd Bank’s 1QFY22 PPOP was in line with estimates and slippages were marginally higher than expectations. On a relative basis, IIB’s asset quality performance seemed manageable in the context of the 1QFY22 outcomes of peers, especially NBFCs, CLSA said.
"While MFIs and CVs did see high stress, all other retail segments and its corporate book held-up well. IIB has been through a tough consolidation period but management now intends to focus on growth as the second wave of Covid-19 impact subsides. IIB is delivering on deposit granularity, better coverage of stressed assets and has a high core PPOP," it said.
CLSA increased the target price on the stock to Rs 1,350 per share from Rs 1,325 earlier and maintained its Buy rating.
UBS
UBS notes that the bank's management expects H2 FY22 to see accelerated loan growth and also see the cost of deposits go down further as it cut deposit rates by 50 bps. The brokerage firm raised loan growth estimates for FY22 to 13 percent.
UBS maintained a Neutral rating on the stock with a target price of Rs 1,100 per share.
Morgan Stanley
Morgan Stanley maintained an Overweight rating and a target price of Rs 1,225 per share on the stock.
"The Q1 bad loan formation at 2.1 percent of loans was good. The core PPOP of 8 percent was above the estimates," the brokerage said. It expects good recovery in H2 FY22.
Goldman Sachs
Goldman Sachs said that the bank is well-positioned in certain businesses such as commercial retail and has a leadership position that will allow it to bounce back relatively quickly as recovery begins.
It has a Buy call with a target of Rs 1,222 per share.
Motilal Oswal
The bank reported an in-line operating performance in a challenging environment. Loan growth moderated, while the liability franchise continues to show an improvement, driving a consistent reduction in funding cost, Motilal Oswal said
Motilal Oswal has a Buy rating with a target of Rs 1,200.
Anand Rathi
"IndusInd Bank’s Q1 FY22 asset quality deteriorated on account of higher slippages from the retail book. Key positives from the results were collection efficiency at 96 percent in June 2021; disbursements normalizing; strong retail deposit growth; sturdy balance sheet with 72 percent coverage and Rs 20.5 billion provision buffer and strong liquidity and capitalisation," said Anand Rathi.
"We maintain our positive view on the bank with a TP of Rs 1,120, valuing it at 1.6x P/ABV on its FY23e book," it said.
At 10:25 am, the stock was trading 1.28 percent higher at Rs 988.15 apiece on the BSE.
(Disclaimer: The views and investment tips expressed by investment experts on CNBCTV18.com are their own and not that of the website or its management. CNBCTV18.com advises users to check with certified experts before taking any investment decisions.)