IndusInd Bank Posts Healthy Q3FY13 Results

IndusInd Bank kicked in the Q3FY2013 results season for the banking space. The bank witnessed robust topline and bottomline growth, coupled with a sharp rise in its margins. As the numbers came in as per the street’s expectations, the stock closed marginally higher by 0.24% at Rs 435 per share. The key financial parameters of the bank are as follows:

The major positive in IndusInd Bank’s results was the margins it notched up. For the Dec 2012 quarter, the Net Interest Margin (NIM) increased by 21 basis points to 3.46% on a YoY basis. This is after the cost of deposits and cost of funds decreased by 25 and 26 basis points respectively, while the yield on assets and yield on advances increased by 5 and 22 basis points respectively.

The bank faced some pressure with respect to its asset quality. The Net NPAs increased marginally by 1 basis point to 0.3%. However, its Gross NPAs declined by 4 basis points to 0.99%. Further, as on Dec 2012, its Provision Coverage Ratio (PCR) stood at 70.3%, which is in line with the RBI’s guidelines.

In the month of the Dec 2012, the bank had raised funds of around Rs 2000 crore through the Qualified Institutional Placement (QIP) route. This greatly helped its Capital Adequacy Ratio (CAR) to improve. As of Dec 2012, the CAR of the bank stood at 16.56% against 15.08% in the similar period last year. Of this, the Tier 1 CAR stood at 14.85%.

IndusInd Bank also saw robust business growth for the quarter in question. Its total advances grew by 31% to Rs 42426 crore, while the total deposits increased by 26% to Rs 51098 crore on a YoY basis. The loan book of the bank is also well diversified, with 49% of the total loans extended towards Corporate banking while the remaining 51% is given to Retail customers (Consumers Finance). The Retail and Corporate segments performed extremely well during the quarter, growing by 36% and 37% to Rs 1174 and 859 crore respectively. The profit from the same also grew handsomely by 36% and 31% to Rs 316 and Rs 143 crore respectively.

As on Dec 2012, the total branch and ATM network count for the bank stood at 461 and 852 respectively. On the valuations front, it is currently trading at a TTM Price-to-Earnings multiple of 23x and is available at a Price-to-Book value of 3.11x, which we believe is slightly on the expensive side. But looking at the growth factor, we believe that one could invest in the scrip in a staggered manner to garner better returns over a longer period of time.