IndusInd Bank's second quarter financial year 2024 (Q2 FY24) report, published on Thursday, showed a profit after tax (PAT) of INR22 billion ($294 million), marking a year-on-year (YoY) increase of 22%. The bank's net interest income (NII) also grew by 18% YoY, contributing to the rise in profits. This growth was further bolstered by a 15% YoY decrease in provisions.
The bank's loan portfolio expanded significantly, with a 21% YoY growth to INR3.2 trillion ($42.8 billion). Both Corporate and Consumer Finance books demonstrated strength, contributing to the overall loan growth. The bank's position as a prominent player in the Banks industry, as noted by InvestingPro Tips, likely played a role in this expansion.
IndusInd Bank, however, also experienced a rise in fresh slippages, approximately 7% quarter-on-quarter (QoQ) to INR14.7 billion ($196 million), largely due to a significant increase in corporate book slippages from INR0.4 billion to INR2.1 billion. This might be a reflection of the bank's quick burning through cash, another insight provided by InvestingPro Tips.
Despite the rise in slippages, the bank managed to keep its Gross Non-Performing Assets (GNPA) and Net Non-Performing Assets (NNPA) ratios stable at 1.93% and 0.57% respectively. The restructured book saw a decrease of 12 basis points to stand at 0.54%.
Looking ahead, IndusInd Bank is projected to deliver approximately 23% earnings compound annual growth rate (CAGR) over FY24-26, with return on assets (RoA) and return on equity (RoE) expected to reach 2.0% and 16.8% respectively by FY25. These projections align with InvestingPro's real-time metrics, which show a return on assets of 0.35% for the last twelve months of 2023 (LTM2023.Q2).
Based on these projections, Motilal Oswal has maintained a 'BUY' rating for the bank with a target price (TP) of INR1,700. This is in line with the InvestingPro Fair Value of $21.17 USD and the Analyst Targets Fair Value of $24 USD.
For more insights, consider the InvestingPro product which includes additional tips and real-time metrics. The product currently lists 15 additional tips for IndusInd Bank. You can access these tips and more at InvestingPro.
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