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IndusInd Bank Falls 6% Despite Robust Q2 Profit; What Should Investors Do Now?

IndusInd Bank Share Price Today: Shares of IndusInd Bank dipped 6 per cent to Rs 1,150 on the BSE in Thursday’s intra-day trade on profit booking. Despite today’s decline, in the past three months, the stock has outperformed the market surging 35 per cent, as compared to a 7.6 per cent rise in the benchmark index.

The stock has underperformed the Nifty Bank index in the last 1 year, down 1 per cent versus a 2 per cent rise in the index.

The scrip has lost a little over 1 per cent in October so far, snapping losses after 3 consecutive months (July, August, September) of gains. Between July and September, the stock has risen 49 per cent. In June, however, the stock fell nearly 15 per cent. Overall in 2022 YTD, the stock jumped 31 per cent

IndusInd Bank posted a 57 per cent year-on-year rise in net profit this September quarter. Its net profit stood at Rs 1,805.3 crore in Q2FY23 against Rs 1,146.7 crore in Q2FY22. The private lender’s net profit rose 10.6 per cent quarter-on-quarter (QoQ) from Rs 1,631 crore in Q1FY23. Operating profit has gone up 10 per cent year-on-year (YoY) and 3 per cent sequentially to Rs 3,554 crore.

Provisions fell 33 per cent YoY to Rs 1,141 crore in Q2FY23 from Rs 1,706.9 crore in Q2FY22, and it fell 8.7 per cent QoQ from Rs 1,250.9 crore in Q1FY23.

Its gross NPA as a percentage of its total loan book fell to 2.11 per cent in Q2FY23 from 2.77 per cent in Q2FY22, and from 2.35 per cent in Q1FY23. The value of Gross NPA was Rs 5,567 crore in Q2FY23, which was a 10.8 per cent YoY fall from Rs 6,245 crore in Q2FY22 and a 6.1 per cent QoQ fall from Rs 5,932.9 crore.

The bank’s loan book quality remains stable at 18 per cent YoY with traction in Corporate as well as Consumer Finance book. Sequential growth of 6.4 per cent in corporate was driven by working capital loans. Within consumers, growth was broad-based barring micro-finance (MFI). However, growth in MFI book should also pick up as disruption due to regulatory changes has been fully addressed, Motilal Oswal Financial Services said in the result update.

Should you Buy, Sell or Hold IndusInd Shares?

Jefferies said for Q2 FY23, IndusInd Bank’s profit has jumped 60 percent YoY, which is a tad ahead with better NII and lower provisions, said the brokerage.

The brokerage has a Buy tag on IndusInd Bank and has increased its target price to Rs 1,530 from Rs 1,330 earlier. The new TP indicates an upside of 25.5 per cent.

“The strong growth trajectory, coupled with a slight margin uptick and meaningful reduction in GNPA ratio is what we like. We believe the recent board approval of the MD’s term extension by 3 years is positive amid investor concerns about the MD likely not seeking a term extension. RBI approval, too, is keenly awaited, but we reckon it may not be a major hurdle,” said Emkay in an earnings review note. The brokerage has retained its Buy call on the bank stock with a revised target price of Rs 1,500 from Rs 1,275 earlier. The new TP indicated an upside of 23 per cent.

As per LKP Securities, the core operating performance of IndusInd Bank remains healthy. A higher contingent buffer is likely to safeguard the bank from credit disruption from various restructuring schemes, it noted. Thus, it retained a BUY rating on the lender with a price target of Rs 1,474, indicating an upside of 21 percent.

Disclaimer: The views and investment tips by experts in this report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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