IndusInd Bank Gets Bullish Signal, Target Price Set at Rs 960 by Prabhudas Lilladher

IndusInd Bank Sees Improvement in Asset Quality and Loan Growth

IndusInd Bank's recent quarter has been characterized by a significant improvement in asset quality and loan growth, according to a research report by Prabhudas Lilladher. Net interest income (NII) was in-line with expectations, devoid of any one-off factors, while the bank's asset quality showed notable enhancements.

A key highlight of the quarter was the decline in overall slippage, which fell by 29% on a quarterly basis to 212bps. Additionally, microfinance institution (MFI) slippage decreased by approximately 50% on a quarterly basis, resulting in lower provisions of 1.80% (Prabhudas Lilladher estimate: 2.36%). This downward trend in provisions reflects the bank's efforts to de-risk its balance sheet.

The bank's efforts to de-risk its balance sheet are bearing fruit, with the share of large corporate and MFI loans declining to 43% and 5%, respectively, from 48% and 9% on a year-over-year basis. Furthermore, 57% of the MFI portfolio is now covered under the Central Government Fully Funded Managed Guarantee Scheme (CGFMU) credit guarantee, up from 38% as of December 2025. As IndusInd Bank targets system-level credit growth in FY27, deposit accretion remains a key area of focus.

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Recommendations

In light of the bank's performance and outlook, Prabhudas Lilladher maintains a "accumulate" rating and a multiple of 1.0x on FY28 absolute book value (ABV). The target price remains at INR 960.

Recommendation Summary

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