Strong performance--- indusInd Bank

Strong performance in the recent past and positive growth outlook have
led to universal upgrades in earnings estimates.

indusInd Bank posted a strong set of numbers for the September
quarter, showing consistent improvement in operational parameters both
sequentially as well as on a year-on-year (y-o-y) basis, where it
benefits from a low base.

Net interest income increased 60 per cent y-o-y and 12 per cent
sequentially, aided by 33 per cent y-o-y growth in advances, while
deposits increased 37 per cent. Low cost current and savings accounts
(Casa) improved to 25.4 per cent of total deposits from 24.3 per cent
in the June quarter.

Net interest margins rose 55 basis points y-o-y (nine basis points
sequentially) to 3.41 per cent. Market conditions were tough during
the last quarter due to tight liquidity. The bank also saw yields on
advances dipping marginally, while cost of deposits was flat
sequentially. Net profit increased almost 80 per cent y-o-y and 12 per
cent sequentially, helped by falling non-performing loans and 25-per
cent rise in the core fee income.

After its recent qualified institutional placement, the bank has
adequate capital to expand aggressively. It has permission to open 127
branches this year, with 28 launched already. A strong performance in
the recent past and positive growth outlook have led to near universal
upgrades in its earnings estimates. The stock has risen almost 16 per
cent over the last month, outperforming the BSE Bankex by six
percentage points. At Rs 270, the stock is valued at 3.5 times
estimated 2010-11 book value and three times 2011-12 estimates, which
is expensive.

Category: