Shares of IndusInd Bank on Monday extended their gains for the second straight session. The stock edged 0.17 per cent higher today to settle at Rs 1,204.35 over its previous close of Rs 1,202.30. Choice Equity Broking has assigned an ‘Add’ call on the counter with a target price of Rs 1,330. At today’s closing level of Rs 1,204.35, the brokerage suggested a potential upside of 10.43 per cent on the counter.
The lender delivered a healthy performance for Q3 FY23 (December quarter) as earnings growth picked up, loan book sustained momentum while assets quality improved with declining slippages, Choice noted in its latest report.
Profit after tax (PAT) grew by 58.2 per cent year-on-year (YoY) and 8.8 per cent quarter-on-quarter (QoQ) to Rs 1,960 crore, higher than the brokerage’s estimate of Rs 1,700 crore.
“Strong profitability was driven by the robust core operating performance and significant decline in the credit cost. NII (Net interest income) grew by 18.5 per cent YoY. Advances growth picked up to 19.3 per cent YoY on continued momentum in the retail and large corporate book. Core fee income grew by 28 per cent YoY, which along with strong expansion in NII supported the bank to deliver 20% YoY growth in core PPOP during the quarter,” Choice stated.
Gross slippages reduced to Rs 1,500 crore against Rs 1,600 crore in Q2 FY23 due to a significant reduction in the corporate slippages, it added.
“Assets quality improved with decline in stress book, however we remain watchful for fresh slippages from microfinance & CV book. Given the likely strong core performance, earnings growth is expected to remain strong over the FY22-25E. We maintain our ‘Add’ rating with target price of Rs 1,330 valuing bank at P/ABV 1.6x September 2024E,” the brokerage further said.
Support on the counter could be seen at Rs 1,187, followed by Rs 1,180 and Rs 1,140 levels, technical analysts said.
Osho Krishan, Senior Analyst – Technical & Derivative Research at Angel One, said, “IndusInd Bank is hovering near its 52-week high and is placed above all its major exponential moving averages on the daily chart, suggesting inherent strength. The stock has been in consolidation for quite some time and is facing resilience to have a fresh breakout. On the technical front, the immediate support is placed around Rs 1,180, followed by the weekly swing low of the Rs 1,140-odd zone. On the contrary, a decisive breakthrough above Rs 1,265 could only trigger a fresh rally. And in the meantime, the stock is expected to hover in between the mentioned range with a bullish bias.”
“IndusInd Bank has strong daily resistance at Rs 1,227. A daily close above this level could lead to targets of Rs 1,246-1,273 in the coming days. Support will be at Rs 1,187.”
Around 31,000 shares changed hands today on BSE, which was lower than IndusInd’s two-week average volume of 90,000 shares. Turnover on the counter stood at Rs 3.73 crore, commanding a market capitalisation (m-cap) of Rs 93,387.11 crore.
Meanwhile, Indian equity benchmarks settled on a higher note today, led by gains in technology, banks and financials.
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