IndusInd Bank Q3 Results Review - Earnings Progression On Track; Re-Rating To Continue: Motilal Oswal

Motilal Oswal Report

IndusInd Bank Ltd. reported an inline performance with profit after tax at Rs 19.6 billion (up 58% YoY; inline) with steady operating performance across all metrics.

Loan growth came in healthy at 19% YoY with traction in both corporate and consumer finance book. Within consumer, growth was broad based barring micro-finance.

Fresh slippages moderated to Rs 14.7 billion (2.3% annualised). Gross non-performing asset ratio improved 5 bps QoQ to 2.06%, while net non-performing asset increased 1 bp to 0.62%. Restructured book declined to 1.25% in Q3 FY23 from 1.5% in Q2 FY23.

The management suggested for 20-25% loan growth, while continued moderation in credit cost is expected to aid return on asset expansion. We estimate IndusInd Bank to deliver ~37% earnings compound annual growth rate over FY22-25, while return on asset/return on equity to expand to 2.2%/18%, respectively.

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