Institutional Equity Research

CMP* (Rs) 1,230

IndusInd Bank Upside/ (Downside) (%) 9
HOLD
Bloomberg Ticker IIB IN
BFSI | India
Market Cap. (Rs bn) 742 Target Price: Rs1,340
Free Float (%) 85
2QFY20 Result Update | October 11, 2019 Shares O/S (mn) 603

Growth and Quality Premium to Wane; Maintain HOLD

IndusInd Bank (IIB) has reported largely in-line numbers in 2QFY20 with PPoP and PAT growing Share price (%) 1 mth 3 mth 12 mth
by 31% YoY and 50% YoY, respectively (merged financials with BHAFIN from 1QFY20, YoY Absolute performance (7.9) (17.2) (24.5)
numbers not comparable). The bank took the entire hit from DTA markdown during the quarter.
Relative to Nifty (10.0) (14.4) (31.9)
Advances grew by a muted 21% YoY. Ex-BHAFIN, the Bank’s loan book grew by ~19% YoY as per
our estimate. NIM expanded by 5bps QoQ to 4.1% mainly driven by large fixed rate book (~40%)
and decline in cost of wholesale deposits. Gross slippages at 2% (excluding a technical slippage Shareholding Pattern (%) Mar-19 Jun-19
of Rs1.4bn) remains elevated, with rise in slippages from the consumer finance book. Notably, Promoters 15.0 15.0
the Bank raised its PCR by ~600bps to 50% in 2QFY20 from 44% in 1QFY20. RoA for Q2FY20 Custodian/DR 10.7 10.7
stood at a healthy 2% despite higher provisioning (to raise PCR) and weak loan growth. Core Institutions 56.5 55.6
fee-based income grew by a healthy 21% YoY. Looking ahead, we expect moderation in loan Retail 6.5 6.7
growth and risk of higher credit cost to continue to weigh on IIB’s valuation, while concern over Bodies Corporate 11.3 11.9
the management transition could also limit any meaningful upside. Total 100.0 100.0
Further Moderation in Loan Growth to 21%
Key Financials
Advances growth of 21% YoY (+2% QoQ) was the slowest in over 20 quarters. Weak loan growth
in the consumer finance portfolio at 20% YoY (ex-MFI) was also driven by some slowdown in (Rs mn) FY19 FY20E* FY21E*

business banking book (+11% YoY), apart the sluggishness in the CV loan growth (+14% YoY). Loan & Advances 18,63,935 23,11,279 28,65,986
However, unsecured portfolio (personal loan/cards) continued to grow at a healthy rate of >30% NII 88,462 1,18,871 1,45,588
YoY. Loan growth was also impacted by floods in several states during the quarter. While we PPP ex Expt. Items 80,882 1,04,566 1,29,132
expect loan growth to pick-up in 2HFY20E, we reduce our loan growth estimate to ~24% for Reported Profits 33,008 48,184 74,756
FY20E/FY21E from 26% earlier. Earnings Per Share 54.8 69.6 108.0
Steady Rise in NPAs from Consumer Book & Concentration in Corporate Book Key Risks P/E (x) 22.4 17.7 11.4
While overall GNPA ratio at 2.19% as of 2QFY20 was marginally higher by 4bps QoQ, GNPA Adj. BV (Rs) 391.8 460.8 548.6
ratios for the consumer loan book rose by 10bps QoQ (34 bps YoY) to 1.34% and ~14bps for P/ABV (x) 3.1 2.7 2.2
CV loan book to 1.44% (50 bps YoY). We raise our slippages estimates marginally, factoring in Gr. NPAs Ratio (%) 2.1 2.7 2.8
higher slippages from the consumer finance book. Reported SMA-1,2 book increased to 96bps *Merged Financials with BHAFIN, past numbers not comparable
from 35bps in 1QFY20 led by NBFC and other industry. Even though its BB and below rated
book remains sequentially stable at 3.1% and exposure to three potentially stressed groups also
Change of Estimates
declined to 1.1% as on 2QFY20 (from 1.7% in 1QFY20) driven by cash repayments, we continue
to remain cautious on the Bank’s corporate book amidst a weak operating environment, higher (%) FY20E FY21E
exposure to stressed sectors and high concentration in corporate book. Net Operating Revenue (0.5) (1.5)

Outlook & Valuation Pre Provision Profits (0.9) (2.6)

While superior margin and healthy fee-based income profile continue to aid IIB’s return ratios, PAT (4.8) (3.1)
asset quality surprises can’t be ruled out given the concentrated corporate book. This, along
with concerns over management transition and lower growth expectations could be a drag on 1 Year Stock Price Performance
valuations, undermining the premium valuation the bank attracted in the past. Consequently, we
1,900
lower our FY21E target multiple to 2.5x (from 2.9x earlier). Trimming our earnings estimates by 1,800

3-5% for FY20E/FY21E owing to lower loan growth and higher slippages, we maintain our 1,700

HOLD recommendation on the stock with a revised Target Price of Rs1,340 (from Rs1,650 1,600
1,500
earlier) based on 2.5x FY21E ABV. 1,400

Quarterly Performance 1,300

1,200
(Rs mn) 2Q FY20 2Q FY19 % yoy / bps 1Q FY20 % qoq / bps 1,100

Interest Inc. 71,504 54,381 31.5 69,614 2.7 1,000

Nov-18

May-19
Oct-18

Oct-19
Mar-19

Aug-19

Sep-19
Jul-19
Dec-18

Jun-19
Jan-19

Feb-19

Apr-19

Interest Expenses 42,408 32,348 31.1 41,174 3.0

Net Interest Income 29,095 22,033 32.1 28,440 2.3 Note: * CMP as on October 10, 2019
Other Income - Total 17,267 13,173 31.1 16,633 3.8
Net Operating Revenue 46,362 35,206 31.7 45,072 2.9 Research Analyst :
Total Opex 20,363 15,281 33.3 19,163 6.3 Mona Khetan
Pre Provision Profits 25,999 19,924 30.5 25,910 0.3
Contact : (022) 4303 4634
Email : mona.p.khetan@relianceada.com
Provisions & Contingencies - Total 7,377 5,903 25.0 4,306 71.3
Profit Before Tax 18,622 14,022 32.8 21,603 (13.8) D. Vijiya Rao
Reported Profits 13,834 9,201 50.4 14,325 (3.4) Contact : (022) 4303 4633
Source: Company, RSec Research, *Merged Financials with BHAFIN from 1QFY20, YoY numbers not comparable Email : vijiya.rao@relianceada.com
1
Institutional Equity Research

HOLD
CMP (Rs) 1,230
IndusInd Bank Upside/ (Downside) (%) 9
Bloomberg Ticker IIB IN
BFSI | India Target Price: Rs1,340

Risks to the View

ff Upside Risks: Lower-than-expected slippages; higher-than-expected growth in
advances; and strong recoveries from sub-standard assets.

ff Downside Risks: Weaker-than-expected loan book growth driven by unfavourable

development in CV or microfinance businesses; and any major slowdown in economic
activities resulting in higher-than-expected deterioration in asset quality.

Exhibit 1: Income Statement Analysis*

2Q FY20 2Q FY19 % yoy / bps 1Q FY20 % qoq / bps FY19 FY18 % yoy / bps
Interest Inc. 71,504 54,381 31.5 69,614 2.7 2,22,612 1,72,807 28.8
Yield on Advances (%) 12.0 11.4 60 11.3 79 11.3 11.1 26
Yield on Assets (%) 10.0 9.5 52 9.5 49 9.5 9.1 44
Interest Expenses 42,408 32,348 31.1 41,174 3.0 1,34,150 97,833 37.1
Cost of Dep. (%) 6.7 6.5 16 6.8 (10) 6.6 6.0 59
Cost of Fund (%) 5.9 5.6 26 5.9 (2) 5.7 5.1 61
Net Interest Income 29,095 22,033 32.1 28,440 2.3 88,462 74,974 18.0
NII to Net Operative Income 62.8 62.6 17 63.1 (34) 61.0 61.2 (18)
NIM (%) 4.10 3.8 26 4.1 5 3.8 4.0 (19)
Core Fee Income 14,680 12,180 20.5 14,210 3.3 50,690 41,770 21.4
Profit on Sale / Rev of Investments 2,590 990 161.6 2,410 7.5 5,786 5,731 1.0
Other Income - Total 17,267 13,173 31.1 16,633 3.8 56,467 47,501 18.9
Other Income to Net Operative 37.2 37.4 (17) 36.9 34 39.0 38.8 18
Income
Net Operating Revenue 46,362 35,206 31.7 45,072 2.9 1,44,929 1,22,475 18.3
Employee Expenses 5,155 4,582 12.5 6,472 (20.4) 18,535 17,807 4.1
Empl. Cost/Oper. Exps. 11.1 13.0 (190) 14.4 (324) 12.8 14.5 (175)
Other Opex 15,208 10,699 42.1 12,691 19.8 45,512 38,108 19.4
Other Opex/ Assets 0.5 0.5 8 0.4 9 1.8 1.9 (8)
Total Opex 20,363 15,281 33.3 19,163 6.3 64,047 55,914 14.5
Cost to Income Ratio (%) 43.9 43.4 52 42.5 141 44.2 45.7 (146)
Pre Provision Profits 25,999 19,924 30.5 25,910 0.3 80,882 66,561 21.5
Provisions & Contingencies - 7,377 5,903 25.0 4,306 71.3 31,077 11,754 164.4
Total
Credit Cost (%) 0.18 0.12 6 - - 1.46 0.62 84
NPA Provisions as % Operating 28.4 29.6 (125) 16.6 1,175 38.4 17.7 2,076
Income
Profit Before Tax 18,622 14,022 32.8 21,603 (13.8) 49,806 54,807 (9.1)
Tax 4,789 4,821 (0.7) 7,278 (34.2) 16,801 18,751 (10.4)
Effective Tax Rate (%) 25.7 34.4 (867) 33.7 (797.7) 33.7 34.2 (48)
Reported Profits 13,834 9,201 50.4 14,325 (3.4) 33,004 36,056 (8.5)
RoA (%) 2.0 1.6 36 2.1 (10.0) 1.4 1.9 (50)
RoE (%) 17.3 14.9 241 18.5 (119) 13.3 16.5 (323)
Basic EPS 20.0 15.3 30.3 20.7 (3.4) 54.9 60.2 (8.8)
Source: Company, RSec Research; *Merged Financials with BHAFIN from 1QFY20, YoY numbers not comparable

2
Institutional Equity Research

HOLD
CMP (Rs) 1,230
IndusInd Bank Upside/ (Downside) (%) 9
Bloomberg Ticker IIB IN
BFSI | India Target Price: Rs1,340

Exhibit 2: Margins benefit on account of IIB merger Exhibit 3: High treasury income aids profitability
(Rs mn) (%) 100%
35,000 4.2
4.1
4.1
30,000 4.1 95%
4.0 4.0 4.0
25,000 4.0
3.9 3.9 90%
20,000 3.8 3.8 3.8
15,000 3.7 85%
3.6 3.6
10,000
3.5 80%
5,000 3.4
0 3.3 75%
2Q FY20
2Q FY18

3Q FY18

4Q FY18

2Q FY19

3Q FY19

4Q FY19

1Q FY20
1Q FY19

2Q FY20
2Q FY18

3Q FY18

4Q FY18

2Q FY19

3Q FY19

4Q FY19

1Q FY20
1Q FY19
Net Interest Income NIM (%) Core Fee Income Profit on Sale / Rev of Investments

Source: Company, RSec Research

Exhibit 4: Trend in Cost-Income ratio Exhibit 5: Credit costs trend

(Rs mn) (%) (Rs mn) (%)
18,000 3.0
46.0

2.5
25,000 47.0
45.7

45.5

16,000
45.0

46.0 2.5
20,000 14,000
44.2

43.9

45.0 12,000 2.0

43.7
43.4

15,000 10,000
44.0 1.5
42.5

1.0
1.0
1.0
8,000
43.0
0.7

10,000
0.6

0.6

6,000 1.0

0.6
0.5

42.0 4,000
5,000 0.5
41.0 2,000
0 0.0
0 40.0

2Q FY20
2Q FY18

3Q FY18

4Q FY18

2Q FY19

3Q FY19

4Q FY19

1Q FY20
1Q FY19
2Q FY20
2Q FY18

3Q FY18

4Q FY18

2Q FY19

3Q FY19

4Q FY19

1Q FY20
1Q FY19

Total Opex Cost to Income Ratio (%) Provisions & Contingencies - Total Provisions / Assets

Source: Company, RSec Research

Exhibit 6: Reported Profit Trend Exhibit 7: Moderation in loan growth on the cards
(Rs mn) (%) (Rs bn) (%)
34.7

16,000 2.5
32.4

2,500 40.0
2.1

29.4
2.0

2.0

28.6

28.4
28.2
27.9
1.9
1.9

14,000 35.0
1.9

25.1
24.5
24.3

2.0 2,000
25.1
1.6
1.6

12,000 30.0
20.8

10,000 1.5 1,500 25.0

8,000 20.0
6,000 1.0 1,000 15.0
0.6

4,000 10.0
0.5 500
2,000 5.0
0 0.0 0 0.0
2Q FY20
2Q FY18

3Q FY18

4Q FY18

2Q FY19

3Q FY19

4Q FY19

1Q FY20
1Q FY18

1Q FY19
3Q FY17

4Q FY17
2Q FY20
2Q FY18

3Q FY18

4Q FY18

2Q FY19

3Q FY19

4Q FY19

1Q FY20
1Q FY19

Reported Profits RoA (%)

Advances - Total Growth (yoy %)

Source: Company, RSec Research

3
Institutional Equity Research

HOLD
CMP (Rs) 1,230
IndusInd Bank Upside/ (Downside) (%) 9
Bloomberg Ticker IIB IN
BFSI | India Target Price: Rs1,340

Exhibit 8: Balance Sheet Analysis

(Rs mn) 1Q FY19 2Q FY19 3Q FY19 4Q FY19 1Q FY20 2Q FY20 QoQ % / bps YoY % / bps
Net Worth 2,49,210 2,53,533 2,64,000 2,66,748 3,20,580 3,28,339 2.4 29.5
RoE (%) 17.3 14.9 15.4 5.5 18.5 17.3 (119) 241
CET1 (%) 13.2 12.8 12.8 12.1 13.0 12.8 (16) (3)
Tier 1 (%) 14.3 13.9 13.8 13.7 14.5 14.3 (20) 41
Total CAR (%) 14.7 14.3 14.2 14.2 14.9 14.7 (20) 42
RWA - Total 18,20,380 19,40,450 20,18,550 21,45,490 23,10,940 23,72,230 2.7 22.3
Advances - Total 15,06,750 16,31,443 17,31,690 18,63,935 19,35,200 19,71,126 1.9 20.8
Investments 5,26,730 5,00,885 5,36,810 5,92,662 6,07,340 6,35,820 4.7 26.9
Total Assets 22,88,790 24,83,199 25,61,990 27,78,194 29,30,460 29,47,293 0.6 18.7
RoA (%) 1.91 1.59 1.62 0.56 2.05 1.95 (10) 36
Deposits 15,88,620 16,82,193 17,57,010 19,48,679 20,05,860 20,71,934 3.3 23.2
Saving Deposit 4,77,110 5,11,060 5,00,230 5,44,860 5,76,520 5,81,170 0.8 13.7
Current Deposit 2,12,680 2,22,690 2,65,260 2,95,840 2,88,870 2,77,210 (4.0) 24.5
CASA Deposits 6,89,800 7,33,750 7,65,490 8,40,700 8,65,390 8,58,380 (0.8) 17.0
CASA Ratio (%) 43.4 43.6 43.6 43.1 43.1 41.4 (170) (220)
Term Deposits 8,98,820 9,48,443 9,91,520 11,07,979 11,40,470 12,13,554 6.4 28.0
Interest Bearing Liabilities - Total 19,59,020 21,10,473 22,02,370 24,21,890 25,03,500 25,17,512 0.6 19.3
Source: Company, RSec Research, *Merged Financials with BHAFIN from 1QFY20, YoY numbers not comparable

Exhibit 9: Earning Assets Mix & Incremental Contribution

(Rs mn) As on (Rs mn) As % of YoY/ YTD growth Incremental Contribution in
Working (% / bps) Working Assets (%)
FY17 FY18 FY19 2Q FY20 Assets FY18 FY19 2Q FY20 FY18 FY19 2Q FY20
Corporate Banking 5,92,790 7,81,170 10,24,210 8,96,610 32.6 31.8 31.1 (12.5) 47.3 46.6 (85.6)
Large Corporates 3,14,770 4,42,890 5,21,660 4,83,190 17.5 40.7 17.8 (7.4) 32.2 15.1 (25.8)
Mid size Corporates 2,22,030 2,56,520 3,33,690 3,71,940 13.5 15.5 30.1 11.5 8.7 14.8 25.7
Small Corporates 55,990 81,760 1,68,860 41,480 1.5 46.0 106.5 (75.4) 6.5 16.7 (85.5)
Consumer Finance 4,55,290 6,68,380 8,39,750 10,74,520 39.0 46.8 25.6 28.0 53.5 32.8 157.6
Comm. Vehicle Loans 1,56,060 1,98,720 2,44,440 2,50,920 9.1 27.3 23.0 2.7 10.7 8.8 4.3
Utility Vehicle Loans 23,420 28,660 35,970 40,090 1.5 22.4 25.5 11.5 1.3 1.4 2.8
Small CV 23,740 25,280 31,350 33,860 1.2 6.5 24.0 8.0 0.4 1.2 1.7
Two Wheeler Loans 32,620 35,890 44,820 47,990 1.7 10.0 24.9 7.1 0.8 1.7 2.1
Car Loans 46,650 53,450 65,370 70,130 2.5 14.6 22.3 7.3 1.7 2.3 3.2
Tractor 18,130 27,260 35,200 41,320 1.5 50.4 29.1 17.4 2.3 1.5 4.1
Equipment Financing 41,200 54,790 75,690 80,410 2.9 33.0 38.1 6.2 3.4 4.0 3.2
Credit Card 17,040 26,960 43,820 42,030 1.5 58.2 62.5 (4.1) 2.5 3.2 (1.2)
Loan Against Property 70,510 80,090 89,250 87,850 3.2 13.6 11.4 (1.6) 2.4 1.8 (0.9)
BL, PL, GL, Others 25,920 41,300 60,950 77,480 2.8 59.3 47.6 27.1 3.9 3.8 11.1
Advances - Total 11,30,805 14,49,537 18,63,935 19,71,126 71.6 28.2 28.6 5.8 80.0 79.4 71.9
Source: Company, RSec Research, *Merged Financials with BHAFIN from 1QFY20, YoY numbers not comparable

4
Institutional Equity Research

HOLD
CMP (Rs) 1,230
IndusInd Bank Upside/ (Downside) (%) 9
Bloomberg Ticker IIB IN
BFSI | India Target Price: Rs1,340

Exhibit 10: Funding Mix & Incremental Contribution

(Rs mn) As on (Rs mn) As YoY/ YTD growth Incremental Contribution YoY/
% of (% / bps) YTD Growth (%)
FY17 FY18 FY19 2Q FY20 Total FY18 FY19 2Q FY20 FY18 FY19 2Q FY20
Credit
Deposits 12,65,722 15,16,392 19,48,679 20,71,934 72.8 19.8 28.5 6.3 56.8 78.4 78.4

Saving Deposit 2,70,372 4,58,883 5,44,860 5,81,170 20.4 69.7 18.7 6.7 42.7 15.6 23.1

Current Deposit 1,96,088 2,08,410 2,95,840 2,77,210 9.7 6.3 42.0 (6.3) 2.8 15.9 (11.9)

CASA Deposits 4,66,460 6,67,293 8,40,700 8,58,380 30.2 43.1 26.0 2.1 45.5 31.5 11.2

Term Deposits 7,99,262 8,49,099 11,07,979 12,13,554 42.6 6.2 30.5 9.5 11.3 47.0 67.2

Borrowings 2,24,537 3,82,891 4,73,211 4,45,578 15.7 70.5 23.6 (5.8) 35.9 16.4 (17.6)

Interest Bearing Lia - Total 14,90,259 18,99,283 24,21,890 25,17,512 88.5 27.4 27.5 3.9 92.8 94.8 60.8
Cost of Fund (%) 5.2 5.1 5.7 5.9 (10) 61 20
Net Worth 2,06,309 2,38,271 2,66,748 3,28,339 11.5 15.5 12.0 23.1 7.2 5.2 39.2
Working Fund 16,96,568 21,37,553 26,88,638 28,45,851 100.0 26.0 25.8 5.8 100.0 100.0 100.0

Interest Exp. / Assets 5.19 4.89 5.37 5.9 (30) 48 55

Source: Company, RSec Research, *Merged Financials with BHAFIN from 1QFY20, YoY numbers not comparable

Exhibit 11: Asset Quality Analysis

(Rs mn) 1Q FY19 2Q FY19 3Q FY19 4Q FY19 1Q FY20 2Q FY20 QoQ % / bps YoY % / bps

Total Slippages 4,750 4,190 8,060 36,880 7,250 9,600 32.4 129.1
Slippages Ratio (%) 0.33 0.29 0.56 2.54 0.39 0.52 13 23
Gross NPA 17,406 17,814 19,682 39,474 41,997 43,702 4.1 145.3
Gross NPAs Ratio (%) 1.15 1.09 1.13 2.10 2.15 2.19 4 110
PCR - Calculated (%) 56.2 55.8 47.7 43.0 43.3 49.6 628 (619)
Net NPA 7,624 7,876 10,293 22,483 23,805 22,026 (7.5) 179.7
Net NPAs Ratio (%) 0.51 0.48 0.59 1.20 1.23 1.12 (11) 64
Standard Restructured 690 1,780 1,860 1,686 1,548 2,163 39.7 21.5
Std. Rest. Adv. as % of Advances 0.1 0.1 0.11 0.09 0.08 0.11 3 -
Corporate Bank - Credit Cost 800 590 1,580 18,370 670 1,010 50.7 71.2
Consumer Finance - Credit Cost 1,290 1,410 1,480 1,670 2,380 2,620 10.1 85.8
Gross Credit Costs 2,090 2,000 3,060 20,040 3,040 3,630 19.4 81.5
Gross Credit Costs (bps) 14 12 18 108 16 18 2 6
Net Credit Cost 2,050 1,930 2,990 19,920 2,930 3,480 18.8 80.3
Net Credit Costs (BPS) 14 12 17 107 15 18 3 6
Source: Company, RSec Research, *Merged Financials with BHAFIN from 1QFY20, YoY numbers not comparable

Exhibit 12: Change in Estimates (Rs mn)

Previous Revised Change %
FY20E FY21E FY20E FY21E FY20E FY21E
Net Operating Revenue 1,89,567 2,30,875 1,88,589 2,27,473 (0.5) (1.5)
Pre Provision Profits 1,05,544 1,32,535 1,04,566 1,29,132 (0.9) (2.6)
PAT 50,589 77,161 48,184 74,756 (4.8) (3.1)
Source: Company, RSec Research

5
Institutional Equity Research

HOLD
CMP (Rs) 1,230
IndusInd Bank Upside/ (Downside) (%) 9
Bloomberg Ticker IIB IN
BFSI | India Target Price: Rs1,340

Profit & Loss Statement

Y/E Mar (Rs mn) FY18 FY19 FY20E* FY21E*
Interest Income 1,72,807 2,22,612 2,83,760 3,42,347

Interest Expenses 97,833 1,34,150 1,64,889 1,96,758

Net Interest Income 74,974 88,462 1,18,871 1,45,588

NIM (%) 3.98 3.77 4.14 4.21

Core Fee Income 41,770 50,690 63,363 75,401

Securities/MM/FX Trading/ 5,731 5,786 6,365 6,492

Others

Other Income - Total 47,501 56,467 69,718 81,884

Net Operating Revenue 1,22,475 1,44,929 1,88,589 2,27,473

Employee Exp. 17,807 18,535 27,440 31,007

Other Opex 38,108 45,512 56,583 67,334

Total Opex 55,914 64,047 84,023 98,341

C/I Ratio 45.65 44.19 44.55 43.23

Pre Provision Profits 66,561 80,882 1,04,566 1,29,132

PPP Growth (yoy %) 22.1 21.5 29.3 23.5

Provisions & Contingencies - Total 11,754 31,077 37,644 29,232

Credit Cost (As % of Op. AUM) 0.62 1.46 1.79 1.11

Profit Before Tax 54,807 49,806 66,922 99,901

Tax 18,747 16,797 18,738 25,145

Effective Tax Rate 34.2 33.7 28.0 25.2

Reported Profits 36,060 33,008 48,184 74,756

PAT Growth (yoy %) 25.7 (8.5) 46.0 55.1

*Merged Financials with BHAFIN, past numbers not comparable

6
Institutional Equity Research

HOLD
CMP (Rs) 1,230
IndusInd Bank Upside/ (Downside) (%) 9
Bloomberg Ticker IIB IN
BFSI | India Target Price: Rs1,340

Balance Sheet
Y/E Mar FY18 FY19 FY20E* FY21E*
Equity Share Capital 6,002 6,027 6,923 6,923

Reserves (ex Revel. Reserve) 2,28,646 2,57,577 3,41,163 4,08,834

Net Worth - Ex Revaluation 2,34,649 2,63,604 3,48,086 4,15,757

Revaluation Reserve 3,622 3,144 4,018 3,945

Equity Warrant & Other 146 112 128 128

Deposits 15,16,392 19,48,679 23,78,804 29,72,438

Borrowings 3,82,891 4,73,211 5,57,991 6,08,813

Interest Bearing Liabilities 18,99,283 24,21,890 29,36,795 35,81,251

Other Lia. & Prov. 78,563 89,444 85,652 91,037

Total Liabilities 22,16,262 27,78,194 33,74,678 40,92,118

Assets

Cash & Cash Equivalent 1,32,159 1,47,834 1,77,468 2,14,315

Investments 5,00,767 5,92,662 6,46,514 7,05,925

Loan & Advances 14,49,537 18,63,935 23,11,279 28,65,986

Growth (yoy %) 28.2 28.6 24.0 24.0

Fixed Assets 13,388 17,100 20,089 20,764

Other Assets 1,20,412 1,56,664 2,19,329 2,85,128

Total Assets 22,16,262 27,78,194 33,74,678 40,92,118

Per Share Data

Y/E March (%) FY18 FY19 FY20E* FY21E*
Face Value 10 10 10 10
Adjusted Share O/S - For Calculation 600 603 692 692
Earnings Per Share 60.1 54.8 69.6 108.0
EPS (% YoY) 25.3 (8.8) 27.1 55.1
P/E (x) 20.5 22.4 17.7 11.4
Book Value 390.9 437.4 502.8 600.6
BVPS (% YoY) 15.4 11.9 15.0 19.4
P/BV (x) 3.1 2.8 2.4 2.0
Adj. BV 370.6 391.8 460.8 548.6
Adj. BV (% YoY) 13.5 5.7 17.6 19.1
P/ABV (x) 3.3 3.1 2.7 2.2
*Merged Financials with BHAFIN, past numbers not comparable

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Institutional Equity Research

HOLD
CMP (Rs) 1,230
IndusInd Bank Upside/ (Downside) (%) 9
Bloomberg Ticker IIB IN
BFSI | India Target Price: Rs1,340

Detail RoA Tree Analysis (%)

Y/E Mar (%) FY18 FY19 FY20E* FY21E*
Yields / Margins
Yield on Advance 10.6 11.0 11.4 11.3
Yield on Funds 9.2 9.5 9.9 9.9
Cost of Funds (CoF) 5.8 6.2 6.2 6.0
NIM's 4.0 3.8 4.1 4.2

Interest Income / Assets 8.6 8.9 9.2 9.2

Interest Exp. / Assets 4.9 5.4 5.4 5.3
NII / Assets 3.7 3.5 3.9 3.9
Other Income / Assets 2.4 2.3 2.3 2.2
Net Operating Income / Assets 6.1 5.8 6.1 6.1

Operating Ratios
NII to Net Operative Income 61.2 61.0 63.0 64.0
Other Income to Net Operative 38.8 39.0 37.0 36.0
Income
Empl. Cost/Oper. Exps. 31.8 28.9 32.7 31.5
Other Op. Exps./Oper. Exps. 68.2 71.1 67.3 68.5
C/I Ratio 45.7 44.2 44.6 43.2
Provisions as % PPP 9.6 21.4 20.0 12.9
Credit Cost (As % of Op. AUM) 0.6 1.5 1.8 1.1
Effective Tax Rate 34.2 33.7 28.0 25.2

Employee Exp. / Assets 0.9 0.7 0.9 0.8

Other Opex/ Assets 1.9 1.8 1.8 1.8
Total Opex / Assets 2.8 2.6 2.7 2.6
Operating Profits / Assets 3.3 3.2 3.4 3.5
Provisions / Assets 0.6 1.2 1.2 0.8
Profit Before Tax / Assets 2.7 2.0 2.2 2.7
Tax Expenses / Assets 0.9 0.7 0.6 0.7
RoA 1.8 1.3 1.6 2.0
Leverage (x) 9.4 10.5 9.7 9.8
RoE 16.2 13.1 15.6 19.4
Adj. RoA 1.8 1.3 1.6 2.0
Adj. RoE 16.2 13.1 15.6 19.4

Balance Sheet Ratio

Y/E Mar (Rs mn) FY18 FY19 FY20E* FY21E*
Credit / Deposit Ratio 95.6 95.7 97.2 96.4
Incremental C/D Ratio 127.2 95.9 104.0 93.4
Investment Deposit Ratio 33.0 30.4 27.2 23.7
Dom. SLR Investment / Deposits 26.6 25.3 22.8 20.0
CASA Ratio 44.0 43.1 43.0 43.0
*Merged Financials with BHAFIN, past numbers not comparable

8
Institutional Equity Research

HOLD
CMP (Rs) 1,230
IndusInd Bank Upside/ (Downside) (%) 9
Bloomberg Ticker IIB IN
BFSI | India Target Price: Rs1,340

Credit Quality
Y/E Mar (%) FY18 FY19 FY20E* FY21E*
Slippage Ratio 2.9 3.7 3.4 2.9
Gross NPA (Cl Bal) 17,049 39,474 61,742 78,925
Gross NPAs Ratio (%) 1.2 2.1 2.7 2.8
PCR (%) 56.3 43.0 60.0 60.0
Net NPA (Cl. Bal.) 7,457 22,483 24,697 31,570
Net NPAs Ratio (%) 0.5 1.2 1.1 1.1

Capital and Asset-Liability Profile (%)

Y/E Mar (%) FY18 FY19 FY20E* FY21E*
Risk Weighted Assets 17,31,560 21,44,749 26,39,889 31,88,002
RWA as % of Total Assets 78.1 77.2 78.2 77.9
RWA as % of AUM/CE 61.2 75.8 93.3 112.7
Total Shareholders’ Equity to Assets 10.6 9.5 10.3 10.2
CET 1 Ratio 13.4 12.1 13.1 13.0
AT 1 Ratio 1.2 1.6 1.3 1.1
Tier 1 Ratio 14.6 13.7 14.4 14.1
Tier 2 Ratio 0.4 0.5 0.4 0.4
Total CRAR Ratio 15.0 14.2 14.8 14.4
*Merged Financials with BHAFIN, past numbers not comparable

9
Institutional Equity Research

HOLD
CMP (Rs) 1,230
IndusInd Bank Upside/ (Downside) (%) 9
Bloomberg Ticker IIB IN
BFSI | India Target Price: Rs1,340

Rating History
Date Reco CMP TP
26-Sept-19 HOLD 1,544 1,650
12-July-19 HOLD 1,510 1,600
23-May-19 HOLD 1,519 1,650
10-Jan-19 HOLD 1,602 1,652
PLEASE CLICK HERE FOR PREVIOUS REPORTS

15-Oct-18 BUY 1,627 2,146

11-Jul-18 BUY 1,917 2,196
20-Apr-18 BUY 1,936 2,196
12-Jan-18 BUY 1,705 1,875

Rating Guides
Rating Expected absolute returns (%) over 12 months
BUY >10%
HOLD -5% to 10%
REDUCE >-5%

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