Company Report | Q2FY12 Result Update

LONG TERM INVESTMENT CALL

18 October 2011
Industry CMP (INR) Target (INR) 52 week High/Low (INR) Market Cap (INR BN) 3M Avg. Daily Volumes P/BV FY12E Shareholding Pattern (%)
Others Noninstitutions 24% 14% Promoters 20%

Accumulate

Banking 267 306 309/200 125930 6106800 2.7X

Q2FY12 Result Highlights Indusind Bank (IIB) delivered another strong quarter growth. Net profit grew by 45% YoY to INR 1931 Mn mainly driven by robust interest on advances of 53% YoY. The fee income growth exceeded loan growth by 30% due to increase focus on (New) fee enhancers. IIBs net interest income has grown by 27% to INR 4192 Mn as compared to INR 3297 Mn in Q2FY11 & other income increased by 37% YoY to INR 2392 Mn. The core fee income grew by 30% to INR 2118.7 Mn YoY. The main drivers has been forign exchange income & distribution fees which grew by 62% & 44% to INR 523 Mn & INR 570.8 Mn YoY respectively. Advances grew by 28% YoY to INR 301.3 Bn & deposits grew by 23%

Institutions 42%

to INR 383.6 Bn, this was stronger than the industrys growth rate. Improvement in deposit mix along with branch expansion (350 from 326 branches) led to higher CASA ratio of 27.7% in Q2FY12 (25.4% in Q2FY11). Reported NIMs have fallen by 6 bps to 3.35% YoY, due to sharp rise

Stock Performance
400 350 300 250 200 150 Dec Aug Oct Jun Apr Oct Feb

in cost of deposits (8.16% in Q2FY12 vs. 5.99% in Q2FY11), however, this was partially offset by an increase in yield on advances (13.81% in Q2FY12 vs. 12.10% in Q2FY11). IIB continue to maintain its asset quality as the Net NPA were contained at 0.31% in Q2FY12 vs. 0.30% in Q2FY11. Also, the Gross NPA was contained at 1.09% vs. 1.08% in Q2FY11. The NPA coverage ratio was at 72%.
IIB NSE Nifty

Performance (%) 1 Month IIB 1.4% NIFTY 0.7%

* Source: Ace, Unicon Research

3 Months -2.9% -8.1%

1 Year 0.7% -15.6%

Also, IIB maintained a healthy capital adequacy ratio (CAR) of 15.45% in Q2FY12. The strong traction in CAR is likely to sustain IIBs growth momentum in coming quarters.

(INR in mn)

Particulars NII Operating Profit PAT

Actual 4192 3330 1931

Estimates 3941 3226 1823

* Source: Company, Unicon Research

Outlook & Valuation Indusind Bank is planning to increase its branch network thereby aiding growth in CASA ratio ~28-30%, which will help the bank increase its NIMs ~3.5% further in FY12. Bank is expected to deliver healthy bottomline growth in FY12 and also to expand its product suite and services. We have ACCUMULATE rating on the stock with target price of INR 306.

Analyst Shweta Rane | srane@uniconindia.in

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email: wealthresearch@uniconindia.in

Financials
(INR in mn)

Interest income Interest expense Net Interest Income Other Income Total Operating income Operating expenditure Operating Profit Operating Profit (%) Provisions PBT Tax PAT EPS (INR.) NIMs
Source: Company, Unicon Research

Q2 FY12 13239 9047 4192 2392 6584 3254 3330 21.30 470 2860 929 1931 4.14 3.35

Q2 FY11 8541 5244 3297 1751 5049 2430 2619 25.44 567 2051 720 1331 2.89 3.41

Y-o-Y 55.00 72.53 27.13 36.60 30.41 33.92 27.16 -413 bps -17.18 39.43 29.07 45.03 43.37 -6 bps

Q1 FY12 11646 7746 3900 2154 6054 2937 3117 22.59 446 2671 870 1802 3.86 3.41

Q-o-Q 13.68 16.80 7.48 11.05 8.75 10.80 6.82 -128 bps 5.34 7.07 6.87 7.17 7.03 -6 bps
*Standalone

Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email: wealthresearch@uniconindia.in

Unicon Investment Ranking Methodology

Rating Return Range Buy >= 20% Accumulate 10% to 20% Hold -10% to 10% Reduce -10% to -20% Sell <= -20%

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Wealth Research, Unicon Financial Intermediaries. Pvt Ltd. Email: wealthresearch@uniconindia.in