IndusInd Bank stock hits 52-week high after a strong Q1 show

New Delhi, Shares of IndusInd Bank climbed nearly 4% on Wednesday morning after the company reported a 30 per cent jump in its consolidated net profit in the April-June quarter. The stock gained 3.81% to hit its 52-week high of ₹1,443.35 on the BSE.

At the NSE, it jumped 3.82% to reach its 52-week high of ₹1,443.40.

In the equity market, the 30-share BSE Sensex climbed 321.91 points to reach its new all-time intraday peak of 67,117.05 in morning trade. The NSE Nifty gained 92.4 points to hit a record intraday high of 19,841.65.

IndusInd Bank on Tuesday reported a 30% jump in its consolidated net profit in the April-June quarter at ₹2,124.50 crore, helped by core income growth and lower bad loan provisions.

In the reporting quarter, the bank's core net interest income grew 18% to ₹4,867 crore on a 22% increase in advances and a 0.08% expansion in the net interest margin to 4.29%.

The other income was up 14% to ₹2,210 crore, while the overall deposits rose 15%. The overall provisions reduced to ₹991 crore -- the best in three years, as compared to ₹1,251 crore in the year-ago period.

On the asset quality front, the gross non-performing assets ratio improved to 1.94% , as against 2.35% in the year-ago period and 1.98% in the March quarter.

The outperformer

The stock has been outperforming the Bank Nifty --- by 14% in the last three months and 24% over one year. According to J M Financial, it's still trading an attractive valuation. "We believe a broad based growth momentum led by positive macros in microfinance industry (MFI) and vehicle finance industry, strong delivery on profitability metrics and healthy asset quality should aid in future stock price performance," the research firm said.

A report by Kotak Institutional Equities says that the company is showing lower volatility in a more predictable business environment. "Loan growth is higher than the industry average, with some key portfolios within retail and MFI showing solid traction. Despite a sharp increase in cost of funds, net interest margins NIM (net interest margin) has held up well at around 4.1-4.3%," it said.

The stock has been performing well, as its business fundamentals are improving. "However, a re-rating from hereon is likely to be a lot more gradual. With return ratios and growth metrics unlikely to be meaningfully different, the probability of IndusInd Bank to trade at a premium looks unlikely at this stage. In our view, the valuations of large banks are likely to create a possible cap to the banks’ valuations, unless we see a meaningful difference," Kotak added.

(With PTI inputs)