Emkay: Indusind Bank Initiating Coverage; Future "prospects" outweigh near term concerns; Accumulate; Target: Rs481

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Rajesh Desai

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Dec 20, 2013, 1:23:24 AM12/20/13

to LONGTERMINVESTORS, library-of-eq...@googlegroups.com, DAILY REPORTS

Initiating Coverage

(December 20, 2013)

Initiating Coverage

IndusInd Bank Ltd

Reco: ACCUMULATE

CMP: Rs 429

Target Price: Rs 481

Future “prospects” outweigh near term concerns

· Massive expansion plans, adequate capital, proven track record and sound management put Indusind Bank in strong position to ramp up its growth when macro turns favourable

· Expanding branch network, with seasoning of existing branches is expected to result in improvement in CASA ratio, leading to margins expansion by 13bps

· We are factoring in rise in credit cost by 15bps, due to higher slippages compared to previous years. Despite that RoA to remain stable at 1.6% due to improvement in NIMs

· At CMP, the stock is valued at 2.1x of its average ABV of FY15E-16E, 15% discount to its average multiple of 2.4x. Initiate with Accumulate rating and target price of Rs481

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