"IndusInd Bank has a strong deposit franchise with high share of low cost CASA deposits (~27%) in its liability profile. However, we believe there is still much headroom for improvement in terms of CASA per branch for the bank (amongst the lowest in the peer group). Going forward with the bank witnessing strong traction in savings deposits, the proportion of savings deposit is expected to move higher thereby making its liability profile more broad based. We expect share of CASA deposits to increase from 27.3% currently to 30.5% by FY14E growing at a CAGR of 35.7% as against CAGR growth of 28.4% in deposits."
"The bank has a strong and diversified fee income mix with 90% of the fee income coming from the steady sources. The bank’s strategy to cross sell wide range of financial products and services by leveraging the existing client relationships is likely to boost profits through fee and fund based income. We expect the non interest income to grow at a CAGR of ~29.3% over FY12-14E."
"We estimate IIB to report an EPS CAGR of 30.1% over FY12-FY14E. ABV is estimated to grow at 20.1% CAGR during the same period. The bank’s strong asset quality, superior return ratios, strong asset growth and adequate capitalization bodes well for its future growth. IIB has historically commanded a premium valuations vis-à-vis its peers due to its track record of consistent growth in earnings and assets. We initiate coverage on Indusind Bank with a BUY rating and March’13 price target of `352.5 /share (based on 2.5x March-14E ABV which is one year average one year forward multiple), implying an upside of 15.4% from current levels," says Aditya Birla Money research report.
No comments:
Post a Comment