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Sector: Financials

Sector view: Positive


Sensex: 19,691
52Weekh/l(Rs): 442/241
Marketcap(Rscr): 22,730
6mAvgvol(000Nos): 799
Bloombergcode: IIBIB
BSEcode: 532187
NSEcode:
INDUSINDBK
FV(Rs): 10
Prices as on 07 Jan, 2013


Companyratinggrid


LowHigh
1 2 3 4 5
EarningsGrowth
RoAProgression
B/SStrength
Valuationappeal
Risk

Sharepricetrend
90
115
140
165
190
Jan12 May12 Sep12 Jan13
IndusIndBk Sensex

Shareholdingpattern

20
40
60
80
100
Mar12 Jun12 Sep12 Dec12
Promoters Institutions Others
%

Rating: BUY
Target(3months): Rs490
CMP: Rs431
Upside: 13.7%
January08,2013
Research Analyst:
RajivMehta
BhavnaSinyal
research@indiainfoline.com
Express Idea
IndusInd Bank
Impressiveloanprofileandresilientfeefranchise
IndusInd Banks loan profile is robust with balanced exposure to a diversified
consumerfinancing(CF)bookandworkingcapitalorientedcorporatebook.CF
loans have grown 2.5x since FY10 increasing its share in overall advances to
52%. The growth has been driven by strong traction in existing products viz
funding of CVs (~50% of segment), UVs, 3Ws, CEs, etc and addition of new
products such as credit cards, LAP, home/personal loans etc. Aided by banks
strong positioning and expanded branch network (doubled since FY10), the
briskgrowthmomentuminCFsegmentislikelytocontinue.Weestimate27%
loanCAGRforIndusIndoverFY1215.Newproductshavestrengthenedbanks
feeincomefranchiseunderpinningresilientgrowthseeninrecentquarters.

NIMtowitnessasharpexpansion;capitalizationboostedbyequityissuance
Favorable assetliability profile in rate down cycle, loan mix shift towards CF
segment, improving CASA ratio and recent equity raising would drive
substantialmarginexpansionforIndusIndinthemediumterm.Whilethebank
iswitnessingarapiddeclineinfundingcost duetolowerwholesalerates,the
blendedloanyieldisexpectedtocomeoffgraduallyduetofixedratenatureof
CF loans. In November 2012, the bank raised Rs20bn equity capital via QIP
enhancingitsTier1ratioby400450bps.Withthis,IndusIndBankissufficiently
capitalizedforarobustassetgrowthoverthenextthreeyears.

Assetqualitytoremainstrong;29%earningsCAGRoverFY1215
Inthecurrentcreditcycle,IndusIndsCFbookhasbehavedpleasinglywellwith
slippages in the range of 1.41.9% over past eight quarters. Predominantly
working capital lending and marginal exposure to lumpy project loans has
manifested in negligible delinquencies and restructuring within the corporate
book. Management has been guiding annual credit cost at 60bps suggesting
continuance of healthy asset quality. Despite budgeting slightly higher credit
cost, we expect IndusInd to deliver stellar 29% earnings CAGR over FY1215
aidedbyhandsomemarginexpansion.RoAdeliverywouldelevatetoindustry
best 1.7%. Supported by robust longterm outlook, we see further room for
valuationrerating.

Financialsummary
Y/e31Mar(Rsm) FY12 FY13E FY14E FY15E
Totaloperatingincome 27,160 35,065 45,794 57,479
Yoygrowth(%) 29.9 29.1 30.6 25.5
Operatingprofit(preprovisions) 13,730 18,143 24,134 30,188
Netprofit 8,026 10,498 13,729 17,152
yoygrowth(%) 39.0 30.8 30.8 24.9

EPS(Rs) 17.2 20.1 26.3 32.9
Adj.BVPS(Rs) 94.4 143.6 164.6 190.9
P/E(x) 25.1 21.4 16.4 13.1
P/Adj.BV(x) 4.6 3.0 2.6 2.3
ROE(%) 19.2 17.3 16.8 18.2
ROA(%) 1.6 1.6 1.7 1.7
Dividendyield(%) 0.5 0.7 0.9 1.1
CAR(%) 13.9 17.0 15.3 14.1
Source:Company,IndiaInfolineResearch

An Express Idea is a recommendation based on our view on the sector and / or stock from a near to medium term perspective,
typicallylessthanthreemonths.Theviewcanbebasedonfundamentalsand/ortechnicalparametersforthestockand/orour
viewonthesectoronthewhole.

Publishedin2013.IndiaInfolineLtd2013

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