In April 2020, last year the Reserve Bank of India gave in-principle consent to IIHL (India Infradebt Limited) allowing it to acquire a larger percentage of the bank’s share so that it can be able to take up 26% as its highest stake.
In this year, IndusInd Bank has experienced a decline of 5% in its stock while the Nifty 50 index, which is considered as the benchmark of India’s stock market, went up by 3% indicating an underperformance.
But there are some positive signs too – According to reports IndusInd International Holding (IIHL), the promoter company of IndusInd Bank wants to raise their stakes from existing 16% up to 26% within next fortnight i.e., in two weeks’ time. Reserve Bank of India has already given permission for this move by Hinduja Brother’s investment arm IIHL. To achieve that they will have to pump more than INR 11,500 crore into the bank.
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Last year same time when RBI gave “in-principle” approval allowing them till maximum level i.e., upto 26%, it was not enough for IIHL. In Q4FY24 despite having stock decline YoY net profit jumped by whopping 15% with Rs2347 crs on back of higher interest income and lower provisions; however, NII grew at tepid pace up only by little over fourteen percent YoY amounting Rs5376 crores while M-o-M basis it came down slightly from previous year’s figure four twenty nine percent).
But this alone does not tell whole story – Kotak Institutional Equities & JM Financial remain optimistic about these numbers too; they maintained their ‘buy’ ratings on IndusInd Bank giving target price INR eighteen hundred per share Kotak & nineteen hundred rupees respectively.
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They said valuations remain attractive even after recent run-up plus investments made towards tech should help drive growth across multiple product cycles over coming years
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