IndusInd Bank gains 5% as Hinduja looks to raise stake to 26% in lender

Shares of IndusInd Bank rose 5 per cent to Rs 1,130 on the BSE in Friday’s intra-day trade on reports that the Hinduja group is planning to raise its stake in the private sector lender from 15 per cent to 26 per cent with an investment of Rs 10,000 crore.

According to a Business Standard report, the Hinduja’s Mauritius-based promoter entity had received the Reserve Bank of India’s (RBI) approval to raise the stake. CLICK HERE FOR FULL REPORT

In November 2021, the RBI had allowed promoters to own as much as 26 per cent in a bank.

At 10:24 am; IndusInd Bank was trading 3 per cent higher at Rs 1,110 as compared to a 0.42 per cent rise in the S&P BSE Sensex. However, in the past one month, the stock has underperformed the market by falling 10 per cent verus a 1.6 per cent decline in the benchmark index.

IndusInd Bank had posted a 19 per cent year-on-year (YoY) increase in net advances at Rs 2.7 trillion by the end of December 31, 2022 (Q3FY23). Net deposits grew 14 per cent YoY to Rs 3.25 trillion. The bank’s loan growth continues to remain healthy as it grew 4.6 per cent QoQ (v/s up 4.9 per cent QoQ in Q2FY23). The CD ratio for the bank also improved further to 83.6 per cent (up 120bp QoQ).

Analysts at Prabhudas Lilladher said they like IndusInd Bank, although approval of MD & CEO's term by the RBI and RTD accretion remain key monitorables.

"IndusInd Bank reported its highest-ever quarterly earnings, largely on account of steady loan growth (+19 per cent YoY), stable margins, sustained traction in fee income and lower credit costs (1.7 per cent annualised). Gross slippages at 2.3 per cent witnessed some deterioration in the CV/CE portfolio and partial fallout from the restructured book, ex of which the back-book appears to be incrementally stabilizing," analysts at HDFC Securities said in a result update.

Given its historically sub-par/non-sticky deposit profile, the brokerage believes IndusInd Bank would continue to face challenges in a deposit-constrained environment, given the narrowing wedge with loan growth.