DAM Capital has reiterated its ‘Buy’ rating on IndusInd Bank while reducing the target price to ₹1,200 (from ₹1,650), reflecting a potential 28.8% upside from the current market price (CMP) of ₹931.85. The brokerage highlights ongoing profitability pressures due to challenges in microfinance lending and slowing loan growth.
Key Highlights on Indusind Bank:
- Profitability Pressure in H2FY25:
The bank is expected to face sustained profitability challenges, particularly in its microfinance lending (MFI) segment, due to high provisioning, slowing loan growth, and pressure on income. - Return on Assets (RoA):
RoAs are projected to remain in the 1% range during H2FY25, reflecting subdued returns amid operational headwinds. - Earnings Revisions:
DAM Capital has slashed its EPS estimates for IndusInd Bank by:- 18% for FY25E
- 14% for FY26E
- 13% for FY27E
- Net Interest Margins (NIMs):
NIMs are forecasted to drop below 4% in Q2FY25, indicating further pressure on profitability.
The bank’s focus on MFI lending has exposed it to sector-specific headwinds, including elevated provisioning requirements and slower loan growth. These challenges, combined with declining NIMs, are weighing on earnings visibility.
While IndusInd Bank continues to navigate near-term challenges, DAM Capital believes the recent correction in the stock presents a long-term opportunity for accumulation, supported by the potential upside in the target price.
Disclaimer: This article is for informational purposes only. Please consult a certified financial advisor before making any investment decisions.
