IndusInd Bank 1QFY20 Result Update:

Dated: 15th July 2019

Consolidated Quarterly performance highlights:
1) Net Interest Income (NII) for the quarter grew 34% YoY at Rs. 28,440 mn. The Net Interest margins (NIMs) stood at 4.05% as against 3.92% in 1QFY19.
2) Fee income grew 28% YoY at Rs 16,630 mn, led by 47% YoY growth in the loan processing fees.
3) Provision for the quarter was Rs 4,310 mn where the credit cost stood at 3,040 mn and other provisions including the standard provisions stood at Rs1,260 mn.
4) Net profit for the quarter grew by 38% at Rs 14,330 mn.
5) Loan book grew by 28% YoY whereas the deposit growth for the quarter stood at 26% YoY led by CASA growth of 25% YoY. CASA (Current Accounts- Savings Accounts) ratio stands at 43%.
6) GNPA & NNPA for the quarter stood at 2.15% & 1.23% respectively. The provision coverage ratio for the bank stood at 43%.
7) The annualised ROE stood at 18.45% vs 5.46% in 4QFY19. 
8) IndusInd bank standalone performance {excluding Bharat Financial Inclusion Ltd (BFIL)}: NII grew by 14% YoY, Fees income grew 23% YoY, and operating profit growth has shown a 17% YoY growth while the Net Profit stood at Rs 12,200 mn, a growth of 18% YoY. IndusInd standalone loan book grew by 26% YoY for the quarter at Rs 18,99,620 mn.
Key Highlights of the Concall:
a) The IndusInd bank has guided for a loan book growth of mid-20% in the medium term.
b) They expect the credit cost to be in the range of 55-65 bps for FY20E.
c) The bank targets to gain market share in vehicle financing from the NBFCs. They expect the slowdown in the auto industry to continue in 2QFY20E. They see some recovery in the auto sector during the festive season this year.
d) IndusInd Bank has made an adequate provision for IL&FS exposure according to the management. Bank’s funded and non-funded exposure to the group is 1.67% of the loan book net of provisions held. 
e) Liabilities of BFIL have not fully transferred and will take another 6-9 month to get reflected. The IndusInd bank expects the AUMs to grow at 35% YoY. BFIL disbursement has seen a slowdown in Orissa & West Bengal region. This slowdown is expected to continue for a few more months.
Consensus estimates: (source market screener website)
• The stock price is Rs 1,485/- as of close price of 15th July 2019. It trades at 2.8x/ 2.4x/ 2.0x the consensus book value for FY20E/ FY21E/ FY22E of Rs 523/ 626/ 741 respectively.
• The consensus price target is Rs 1,851/- valued at 3.0x FY21E book value of Rs 626/-.