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Indusind Bank becomes sixth bank to cross Rs1 trillion market cap

LiveMint logoLiveMint 04-08-2017 Ravindra N. Sonavane

Mumbai: IndusInd Bank Ltd on Friday became the sixth listed Indian bank to join the elite club of lenders that have seen their market capitalisation soar past the Rs1 trillion mark.

HDFC Bank Ltd is the country’s most valued bank with a market cap of Rs4.6 trillion, followed by State Bank of India (Rs 2.64 trillion), ICICI Bank Ltd, Kotak Mahindra Bank Ltd (Rs 1.90 trillion each) and Axis Bank Ltd (Rs1.22 trillion).

Nearly two-thirds of the BSE Sensex companies have a market capitalization of Rs1 trillion, while a third are valued at more than Rs2 trillion, according to data from the exchange. Reliance Industries Ltd is India’s most valued company with a market cap of Rs5.28 trillion, followed by Tata Consultancy Services Ltd at Rs4.83 trillion.

Shares of IndusInd Bank have surged over 50.36% so far this year with investors lapping up the stock on the hopes of continued strong core performance, higher credit growth margins and stable asset quality.

On Friday, the stock closed at a record high of Rs1,671.80 on the BSE, up 1.61% from the previous close while the benchmark Sensex rose 0.27% to close at 32,325.41 points.

In the June quarter, the bank reported a 26.5% increase in its net profit to Rs836.55 crore. Net interest income, or the core income a bank earns by giving loans, rose 30.8% to Rs1,774.06 crore on the back of strong credit growth of 24.3% year-on-year.

Retail loans grew 22% and corporate loans grew at 26% year-on-year. Within retail, while growth in commercial vehicle (CV) loans slowed to 17% year-on-year from 21% in the March quarter, non-CV loans grew faster at 35%.

“We expect IndusInd to outperform given its strong retail lending franchise, strong capitalisation in a sector that is running low on capital and its low non-performing assets”, said IDFC Securities in its 11 July report. The brokerage expects the stock to maintain its premium valuation.

However, rising non-performing assets remain a concern due to slippages from two restructured accounts which came in at Rs200 crore. Also, Indusind did not reverse Rs122 crore in provisions in the March quarter for its exposure to the Jaypee Group.

Gross non-performing assets (NPAs) rose 20.6% to Rs1,271.68 crore and as a percentage of total loans, stood at 1.09%, as against 0.93% in the previous quarter and 0.91% in the year-ago quarter.

Of the analysts covering the Indusind Bank, 42 have a “buy” rating, nine have a “hold” rating, while one has a “sell” rating, shows Bloomberg data.

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