IndianMarketPulse-Investment Advice

We expect the bank to maintain its stable asset quality over FY19-20 due to overall improvement in the rating profile of its corporate book and declining risk weightings of its vehicle-finance book. For   IndusInd Bank, the strategic Bharat Finance deal would be synergistic in the medium term. Growth would be primarily driven through the focus on the retail portfolio, as management intends to re balance  the corporate- and retail-book ratio to 50:50 (from 60:40). Credit growth grew 29.4% y/y in Q1-FY19, driven by secular growth across all segments, led by corporate (up 30% y/y), vehicle and retail (both up 28% y/y). We expect 26% loan growth in the medium term. Asset quality improved with slippages easing to 1.26% of loan book (down 83bps y/y, 111bps q/q) and credit cost softened to 55bps. MORE WILL UPDATE SOON!!

We expect slippages from the corporate book to shrink as the bank increases its exposure to higher-rated corporate bodies. Thus, we model a gross-NPA ratio of 0.97 percent in FY20.    IndusInd Bank continues to report robust operating performance after having absorbed the high NPA divergence reported this quarter, keeping profitability intact. Low credit costs, steady NIM and high credit growth would keep profitability high through FY19-20. The strategic BHAFIN deal would be synergistic in the medium term. We expect the bank to maintain stable asset quality over FY19- 20, aided by its well-diversified loan mix. We expect slippages from the corporate book to shrink as the bank increases its exposure to higher-rated corporate bodies. Thus, we model a gross-NPA ratio of 0.97 percent in FY20. We factor in 26 percent overall credit growth through FY19-20. The corporate book was largely driven by gaining market share from PSBs and working-capital loans to better...