The shares of the banking sector company gained 4 percent after the company’s foreign headroom increased in its December shareholding pattern.
With a market capitalization of Rs 73,437.31 crore, the shares of IndusInd Bank Ltd were trading at Rs 941.20 per share, increasing around 0.38 percent as compared to the previous closing price of Rs 937.60 apiece.
Reason for rise
The bank’s FII stake fell to 46.6% in December from 55.5% in September, increasing the foreign headroom above the 25% threshold. With MSCI applying a half-float factor, the February 2025 review could double the bank’s MSCI weight, boosting its market appeal.
This potential weight increase, estimated at 50 basis points, may attract inflows of $250-$300 million, impacting the stock over the next 3-5 trading days, per Nuvama Alternative Research. Rebalancing and inflows, if realized, will be reflected on February 28.
Brokerage recommendations
Goldman Sachs downgraded IndusInd Bank’s shares to “neutral” from “buy,” reducing the price target to ₹1,090 (from ₹1,300), citing slower revenue growth, rising delinquencies in the commercial retail portfolio, and weaker loan growth trends over the past two quarters.
Financial analysis
Examining the company’s financial performance, revenue magnified by 13 percent from Rs 11,248 crore in Q4FY23 to Rs 12,686 crore in Q4FY24, during the same time frame, net profit shrunk by 39 percent from Rs 2,181 crore to Rs 1,325 crore.
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Economic outlook
Economic activity in Q2 FY25 remained stable, driven by resilient private consumption and investment. Government spending rebounded after the Q1 contraction. RBI’s Neutral stance hints at potential rate cuts amid disinflation. Growth prospects improve with better agriculture, rural demand, and strong services sector performance.
Business Segment Insights
Vehicle Finance loans grew 10% YoY, disbursements hit ₹10,693 crore, while slippages rose to 0.77%. BFIL loans fell 9% QoQ, with non-MFI shares at 15%. Corporate loans grew 16% YoY, and retail assets surged 21% YoY, led by MSME and home loans.
Management comment
Management remains cautiously optimistic about asset growth, focusing on microfinance and vehicle finance. Improved performance is expected in H2 FY25, supported by seasonal factors.
A balanced approach to secured asset growth is prioritized, with a cautious stance on unsecured lending to mitigate risks.
Company Snapshot
IndusInd Bank Limited (the Bank) is engaged in providing financial services. The Bank offers a wide range of products and services for individuals and corporates, including microfinance, personal loans, personal and commercial vehicle loans, credit cards, and small to medium enterprise (SME) loans.
Written by Abhishek Singh
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