Hold IndusInd Bank; target of Rs 234: Asit C. Mehta

Asit C. Mehta has recommended hold rating on IndusInd Bank with a target of Rs 234, in its September 6, 2010 research report.

“IndusInd Bank (IIB) has been able to turnaround itself by demonstrating a significant improvement in performance across most of the parameters following the change in the top-management. We expect healthy growth in loan portfolio in FY 2010-FY 2012 at a CAGR of ~31% and net profit at a CAGR of 43.8% to Rs 7.1 billion over the same period. We have estimated RoAA of 1.3% and 1.4% and RoAE of 16.5% and 17.4% for FY 2011 and FY 2012 respectively, driven by loan growth, increasing yields and improving core fee income.”

“At CMP of Rs 233 the stock trades at 2.6x FY 2012E ABVPS and 14.9x FY 2012E EPS. IIB has shown a significant turnaround under the leadership of new management. It is in a growth stage and we expect the banks’ profitability and balance sheet size to grow ahead of the industry. We thus assign a multiple of 15x to FY 12 EPS of Rs 15.6 to arrive at a price target of Rs 234 and initiate coverage with a “HOLD” rating on the stock,” says Asit C. Mehta research report.

SOURCE: MONEYCONTROL.COM