Company Report | Q1FY12 Result Update

LONG TERM INVESTMENT CALL

9 July 2011
Industry CMP (INR) Target (INR) 52 week High/Low (INR) Market Cap (INR BN) 3M Avg. Daily Volumes P/BV FY12E Shareholding Pattern (%)
Others Noninstitutions 24% 14% Promoters 20%

Accumulate

Banking 287 320 292/200 133571 665280 3x

Q1FY12 Result Highlights Indusind Bank (IIB) net profit grew by 52% YoY to INR 1802 Mn mainly driven by robust core fee income growth of 44% YoY. The proportion of core fee income increased due to increase in its third party products, trade and remittances, foreign exchange and Investment banking income. IIBs net interest income has grown by 32% to INR 3900 Mn as compared to INR 2957 Mn in Q1FY11 & other income increased by 34% YoY to INR 2154 Mn. Advances grew 31.3% YoY to INR 283.8 Bn & deposits grew by 28.7% to INR 352.6 Bn. This was stronger than the industrys growth rate of ~20% & ~17% respectively. Improvement in deposit mix along with branch expansion (326 from 224 branches) led to higher CASA ratio of 28.2% in Q1FY12 (24.3% in Q1FY11). Reported NIM improved 9 bps

Institutions 42%

YoY to 3.41%, however, on sequential basis it declined 9 bps due to sharp rise in the cost of deposits (68 bps QoQ) while yield on advances increased by 68 bps. IIB continued to improve its asset quality and has brought down the net NPA level to 0.3% in Q1FY12 from 0.38% in Q1FY11. Gross NPA ratio fell to 1.08% in Q1FY12 from 1.26% in Q1FY11, but it increased sequentially by 7 bps and 2 bps. The NPA coverage ratio rose 288 bps YoY to 72.9%. Also the IIB maintained a healthy capital adequacy ratio (CAR) of 14.99% in Q1FY12 as against 13.71% in Q1FY11. The

Stock Performance
400 350 300 250 200 150 Jul Sep Nov Jan May Mar Jul

strong traction in CAR is likely to sustain IIBs growth momentum in coming quarters. Outlook & Valuation

IIB

NSE Nifty

Performance (%) 1 Month IIB 9.4% NIFTY 2.5%

* Source: Ace, Unicon Research

3 Months 5.7% -2.2%

1 Year 31.4% 5.8%

Going forward IIB in next 3 years is planning to keep NIMs above 3.5% along with healthy bottom-line, this would be possible through 1. scaling up CASA ratio to 35% with 200 bps to 300 bps improvement every year. 2. Bank plans to take the branch network to 550 by Mar 13. 3. Bank is expected to expand its product suite and services to achieve higher business growth. At the CMP, stock trades at 3x FY12E BV, we have Accumulate rating on the stock with target price of INR 320.

(INR in mn)

Particulars NII Operating Profit PAT

Actual 3900 3117 1802

Estimates 4137 3282 1853

* Source: Company, Unicon Research

Analyst Shweta Rane | srane@uniconindia.in

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email: wealthresearch@uniconindia.in

Financials
(INR in mn)

Interest income Interest expense Net Interest Income Other Income Total Operating income Operating expenditure Operating Profit Operating Profit (%) Provisions PBT Tax PAT EPS (INR.) NIMs
Source: Company, Unicon Research

Q1 FY12 11646 7746 3900 2154 6054 2937 3117 26.77 446 2671 870 1802 4662 3.41

Q1 FY11 7715 4759 2957 1610 4566 2260 2306 29.89 487 1819 633 1186 4111 3.32

Y-o-Y 50.94 62.77 31.90 33.82 32.58 29.93 35.17 -312 bps -8.51 46.87 37.32 51.97 13.40 9 bps

Q4 FY11 10488 6608 3881 1816 5697 2717 2980 28.42 403 2578 860 1718 4660 3.5

Q-o-Q 11.04 17.22 0.50 18.59 6.27 8.10 4.59 -164 bps 10.78 3.61 1.08 4.88 0.04 -8 bps
*Standalone

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email: wealthresearch@uniconindia.in

Unicon Investment Ranking Methodology

Rating Return Range Buy >= 20% Accumulate 10% to 20% Hold -10% to 10% Reduce -10% to -20% Sell <= -20%

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Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email: wealthresearch@uniconindia.in