IndusInd Bank Shares Rise 2% on Upgrade from UBS

IndusInd Bank shares soared in today's trade.

Shares of IndusInd Bank rose 2% in early trade following two upgrades from UBS. The stock was up 1.45% at Rs 1,156 at 9:40 am.

IndusInd Bank told bourses in a recent filing that the bank’s net profit rose 50% to Rs 2,040 crore in the third quarter of FY23. The lender’s net interest income (NII) stood at Rs 4,669 crore, up 17% from Rs 3,985 crore a year earlier.

IndusInd Bank is also likely to be included in the MSCI India Index in the rebalancing exercise in August after sharply increased investment legroom for foreign portfolio investors (FPIs). The increase will boost the share prices of the private sector lender as it could lead to inflows of more than $300 million (Rs 2,500 crore).

UBS has upgraded IndusInd Bank to “buy” from “neutral”. They also raised their target price to Rs 1,450 per share from Rs 1,250. According to brokerages, a benign corporate credit cycle and piquing interest rates will benefit banks. However, stable corporate, CV and MFI cycles will support operating metrics. A higher operating profit before provision (PPoP) to assets ratio could translate into a higher return on assets driven by lower credit costs. IndusInd Bank shares are trading at 1.4 times FY24 book value.

Nuvama maintained its “buy” call on IndusInd with a target price of Rs 1,280, implying an upside potential of 12.1%. According to the brokerage, IndusInd Bank is steadily improving across most parameters. They expect this trend to continue.

IndusInd Bank stock has significantly underperformed the Nifty Bank index over the past 5 years. The Nifty Bank Index has returned 63.05% over the past 5 years. In contrast, shares of IndusInd Bank have lost 39.01% during the same period.

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