IndusInd Bank - The RBI Approves Re-Appointment Of MD, CEO For Two Years: Motilal Oswal
Focus to shift on fundamental performance; estimate FY25 RoE at 18%.
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Motilal Oswal Report
The Reserve Bank of India approved the re-appointment of Mr. Sumant Kathpalia as the Managing Director and Chief Executive Officer of IndusInd Bank Ltd. for a period of two years, effective March 24, 2023, after his current term ends on March 23, 2023.
There was uncertainty around his extension and all sorts of conjectures were made with respect to the tenure that will get approved by the central bank.
We note that there had been instances in the past where despite a shorter term approval, the MD and CEOs of other banks had been able to secure a three- year regular term during subsequent renewals.
IndusInd Bank’s stock price has been under pressure not only due to the macro uncertainty but also because of the clarity around the extension. We thus believe the RBI approval will now shift the focus to the fundamental performance of the bank.
IndusInd Bank has been demonstrating a healthy improvement in operating performance fueled by a pick-up in loan growth, strengthening liability franchise and improving asset quality.
We estimate IndusInd Bank to deliver 20% loan compound annual growth rate over FY23-25.
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