IndusInd Bank: FY21 to be tough for IndusInd: Brokerages

Mumbai: Brokerages expect asset quality stress for IndusInd Bank to remain elevated in the near term. According to analysts, high credit costs and weak revenues may weigh on IndusInd’s earnings in the ongoing financial year but many have maintained ‘buy’ ratings as they expect recovery in earnings from FY22.

CLSA has raised the target price on the stock to ₹610 from ₹595 and retained a ‘buy’ rating as it expects IndusInd Bank’s earnings to rebound from FY22 onwards. Kotak Institutional Equities has maintained ‘add’ rating with a target price of ₹600. Jefferies has retained ‘buy’ rating on IndusInd Bank and revised target price to ₹520 from ₹510.

IndusInd’s earnings in FY21 will be depressed by high credit costs and a weaker topline; we expect a recovery from FY22, said Jefferies.

The bank’s gross NPA ratio in the March quarter rose to 2.45 per cent from 2.18 per cent and net non-performing assets came at 0.91 per cent versus 1.05 per cent a quarter ago.

Ambit has retained a ‘sell’ rating and revised target price to ₹364 from ₹355. JP Morgan has downgraded the stock to ‘underweight’ from ‘neutral’ and revised target price higher to ₹375 from ₹350.

“Given a slowing economy and historically riskier underwriting on the corporate back book, we believe asset quality risks will remain elevated in the near term,” said JP Morgan.

Credit Suisse has maintained ‘underperform’ rating on the stock with target price of ₹430. The brokerage expects the lender’s growth in the ongoing financial year to be below 10 per cent.