Citi has reiterated its ‘Buy’ rating on IndusInd Bank, setting a target price of ₹1,378, indicating a potential upside of up to 31% from the current market price of ₹1,049.95. The brokerage notes that uncertainty remains regarding the reappointment of the MD & CEO, with the bank awaiting further communication from the Reserve Bank of India (RBI).
Citi highlights concerns over microfinance (MFI) loan slippages, expecting them to remain elevated in Q4, surpassing Q3 levels. This could lead to higher overall slippages, requiring increased provisioning. However, the brokerage maintains a constructive outlook on MFI disbursements, expecting Q4 to perform better than Q3.
The report also warns that net interest margins (NIMs) may remain under pressure in Q4, primarily due to a declining proportion of MFI loans and interest reversals on higher slippages. Despite these near-term challenges, Citi states that IndusInd Bank remains relatively shielded compared to its peers in a potential rate-cut environment, which could help stabilize earnings in the long run.
Disclaimer: The above stock update is based on brokerage reports and company announcements. Investors are advised to conduct their own research and consult with a financial advisor before making any investment decisions.
