As compared to 250bps, 500bps growth outperformed FY21-24E. We increase target multiples and rollover valuations to Sepemtember 23E for most companies in our coverage area. We are still broadly positive across the sector and ahead consensus on growth/EPS; Infosys and HCLT are our top picks. Title="HDFC Securities research report's Outlook and Valuations: "YTD EPS upgrades (consensus), have been led by mid tiers like Tata Elxis and Mindtree. They range from 20-40% and, within tier 1, Wipro (15%). The sector (coverage universe), will post 14% and 14.5% USD revenue/APAT growth over FY21-24E, compared to 6.5/7.5% over the past five year. Based on the relative outperformance of mid-tier companies (>500bps growth over FY21-24E, as opposed to 250bps previously), we believe that the valuation premium may continue relative to tier 1. We increase target multiples and rollover valuations to Sepemtember 23E for most companies in our coverage area. We are still broadly positive across the sector and ahead consensus on growth/EPS; Infosys and HCLT are our top picks. width="100%" height="auto” > 500bps growth performance over FY21-24E compared to 250bps previously We increase target multiples and rollover valuations to Sepemtember 23E for most companies in our coverage area. We are still broadly positive across the sector and ahead consensus on growth/EPS; Infosys and HCLT are our top picks. Title="HDFC Securities research report's Outlook and Valuations: "The YTD EPS Upgrades (consensus), have been led mid-tiers like Tata Elxis and Mindtree, Mastek and Persistent Systems. They range from 20-40% and within tier 1 by Wipro (15%). The sector (coverage universe), will post 14% and 14.5% USD revenue/APAT growth over FY21-24E, compared to 6.5/7.5% over the past five year. Based on the relative outperformance of mid-tier companies (>500bps growth over FY21-24E, as opposed to 250bps previously), we believe that the valuation premium may continue relative to tier 1. We increase target multiples and rollover valuations to Sepemtember 23E for most companies in our coverage area. We are still broadly positive across the sector and ahead consensus on growth/EPS; Infosys and HCLT are our top picks. width="100%" height="auto") > HDFC Securities research report on outlook and valuations. "The YTDEPS upgrades (consensus), have been led mid-tiers like Tata Elxis and Mindtree and Mastek. They range from 20-40 percent, while within Tier 1, Wipro is 15%. The sector (coverage universe), will post 14% and 14.5% USD revenue/APAT growth over FY21-24E, compared to 6.5/7.5% over the past five year. Based on the relative outperformance of mid-tier companies (more than 500bps growth over FY21-24E, as opposed to 250bps previously), we believe that the valuation premium may continue relative to tier 1. We increase target multiples and rollover valuations to Sepemtember 23E for most companies in our coverage area. We are still broadly positive across the sector and ahead consensus on growth/EPS; Infosys and HCLT are our top picks.
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Motilal Olswal's research on IndusInd bank
The IIB has been able to show results through its consistent efforts to strengthen its liability franchise. Management has increased their focus on securing Retail deposits after witnessing a dramatic drop in deposits since Mar'20. In Sep'21, the same has increased by 59% YoY while the mix according to LCR disclosures rose 980bp to 41%. Due to the challenging business environment and low demand, loan growth has been slow over the last few quarters. The Corporate book saw a decrease over FY21. The bank reports a healthy recovery with a QoQ increase of 5% over 2QFY22. A positive outlook on demand and a better CV cycle would help to maintain the momentum. Over FY21-24E, we expect 17% loan CAGR. Overall, the risks to asset quality are increasing. Provisioning will continue as IIB would provide MFI/restructuring, and is looking for contingency to its IDEA exposure. We expect credit cost to decrease gradually to 1.8% in FY24E, and GNPA/NNPA levels to decline to 1.8%/0.5% in FY24E.
Outlook
The IIB stock has experienced a healthy (24%) return in the last two months due to abating concerns about asset quality and improving demand/business outlook. In the short term, asset quality pressure will likely remain. Comfort comes from a healthy PCR of 72% and a provision buffer of 1.4% on loans. In FY24E, we expect a RoA/RoE ratio of 2.0%/16.7%. Our Buy rating is maintained with an INR1,400/share TP (1.9x 1HFY24E BV).
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