 "IndusInd Bank share drops 3%, hits 52-week low as UBS slashes target price")
IndusInd Bank share price: Private banking company IndusInd Bank shares took a hit on Friday, December 13, 2024, as the scrip fell up to 3.24 per cent to a fresh 52-week low of Rs 965.55 per share.
The fall in the private lender share price came after Zurich, Switzerland-based brokerage UBS slashed its target price to Rs 1,150 per share, according to reports. However, the brokerage has maintained a ‘Neutral’ stance on the share.
In a separate report dated December 10, Nomura analysts highlighted concerns stemming from regulatory tightening by the Reserve Bank of India (RBI). They noted that many investors view the banking sector as increasingly challenging to invest in, apart from a select group of high-quality names. While any relaxation in the current draft regulations could positively impact the sector’s loan growth and profitability outlook, the likelihood of such changes remains uncertain.
Regarding potential interest rate cuts, Nomura’s analysis indicates that a 50-basis-point reduction in the repo rate could negatively impact the return on assets (RoA) of large banks by approximately 5-10 basis points. For mid-sized banks, such as AU Small Finance Bank, IndusInd Bank, and Bandhan Bank (all rated ‘Neutral’), the impact would be relatively smaller.
However, the report highlighted that analysts are hesitant to shape their sector outlook solely based on net interest margin (NIM) implications, especially when asset quality concerns take precedence.
Consequently, Nomura expects stock price outperformance in the banking sector to remain concentrated among select players. Their preferred picks include SBI, ICICI Bank, and Federal Bank.
IndusInd Bank financial performance
Also Read
IndusInd Bank’s Net Interest Income (NII) for the quarter ended September 30, 2024 (Q2FY25) stood at Rs 5,347 crores, rising 5 per cent year-on-year (Y-o-Y). Its Net Interest Margin (NIM) for Q2FY25 came in at 4.08 per cent, as against 4.29 per cent for Q2FY24. The NIM was lower inter alia as the Bank reduced share of microfinance loans in the overall loans.
Yield on Assets stood at 9.69 per cent for the quarter ended September 30, 2024 and September 30, 2023. While, the Cost of Fund was at 5.61 per cent, as opposed to 5.40 per cent for corresponding quarter of previous year.
Pre Provision Operating Profit (PPOP) stood at Rs 3,600 crore for the quarter ended September 30, 2024 as against Rs 3,909 crores for corresponding quarter of previous year.
Meanwhile, the net profit for the quarter ended September 30, 2024 was Rs 1,331 crore as compared to Rs 2,202 crores during corresponding quarter of previous year.
On the asset quality front, the loan book quality remains stable. The Gross NPA were at 2.11 per cent of gross advances as on September 30, 2024 as against 2.02 per cent as on June 30, 2024. Net Non-Performing Assets were 0.64 per cent of net advances as on September 30, 2024 as compared to 0.60 per cent as on June 30, 2024.
About IndusInd Bank
IndusInd Bank Limited has a rich 30-year legacy of redefining banking through innovation and progressive financial solutions. With a focus on delivering an elevated banking experience, the Bank caters to a diverse range of stakeholders, including government entities, public sector units (PSUs), retail customers, and large corporations.
Its portfolio includes microfinance, personal loans, SME loans, debit/credit cards, vehicle financing, affluent and NRI banking services, advanced digital banking facilities, and ESG-linked financial products.
The Bank extends its reach to the global Indian diaspora with representative offices in London, Dubai, and Abu Dhabi. As of September 30, 2024, IndusInd Bank serves approximately 41 million customers through its 3,040 branches/banking outlets and 3,011 ATMs, with a presence in 1.61 lakh villages across India.
At 11:46 AM, IndusInd Bank shares were trading 2.66 per cent lower at Rs 971.35 per share. In comparison, BSE Sensex was down 0.71 per cent or 579.44 points to 80,710.52 levels.