IndusInd Bank’s Strong Q2FY24 Results and Positive Outlook

IndusInd Bank's Strong Q2FY24 Results and Positive Outlook
IndusInd Bank's Strong Q2FY24 Results and Positive Outlook
IndusInd Bank's Strong Q2FY24 Results and Positive Outlook
IndusInd Bank's Strong Q2FY24 Results and Positive Outlook

IndusInd Bank’s Strong Q2FY24 Results and Positive Outlook

IndusInd Bank’s Strong Q2FY24 Results and Positive Outlook

IndusInd Bank’s Strong Q2FY24 Results and Positive Outlook

After reporting its Q2FY24 earnings, IndusInd Bank, the fifth-largest private bank in India, backed by the Hinduja Group, received continued optimism from domestic brokerage firms. The bank’s shares reacted positively to the earnings announcement, surging by 3.12% to an intraday high of ₹1,464.70 per share, and were trading with gains of 2.13% at ₹1,450.60 at 11:45 AM.

Impressive Q2FY24 Performance

IndusInd Bank reported a robust performance for Q2FY24, with an 18% year-on-year (YoY) and 4% quarter-on-quarter (QoQ) increase in net interest income (NII) to ₹5,077 crore. The net interest margin stood at 4.29%, compared to 4.24% in Q2FY23 and 4.29% in Q1FY24. The bank’s pre-provision operating profit (PPOP) reached ₹3,881 crore for the quarter ending September 30, 2023, marking a 10% growth over the same period in the previous year, where it stood at ₹3,520 crore. Provisions decreased by 15% YoY to ₹974 crore. This drop in provisions, along with improved operating profit growth, resulted in a net profit of ₹2,181 crore, a 22% YoY increase compared to ₹1,787 crore in the corresponding quarter of the previous year.

Strong Asset Quality and Brokers’ Recommendations

On the asset quality front, the gross non-performing asset (NPA) ratio decreased to 1.93% in Q2FY24, down from 2.11% in Q2FY23, while the net NPA ratio was at 0.57% in Q2FY24, compared to 0.61% in Q2FY23.

Following this strong performance, domestic brokerage firms expressed their optimism:

  • Sharekhan maintained its ‘buy’ call on the stock with an unchanged target price of ₹1,650, citing strong loan growth, stable NIMs (net interest margins), and lower credit costs as factors supporting return ratios and earnings trajectory.
  • Kotak Institutional Equities also retained its ‘buy’ call, raising the target price to ₹1,650 from ₹1,600, emphasizing the bank’s potential for further reduction in the current discount to larger peers.
  • Nuvama Institutional Equites continued with its ‘buy’ rating and set a target price of ₹1,665, highlighting healthy earnings for Q2FY24, with a positive outlook on retail slippage, deposit growth, and buffer provisions.

The bank’s consistent performance and improving asset quality are contributing to its positive market sentiment.

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