IndusInd Bank Maintains Neutral Rating, Target Price Set at Rs 950 by Motilal Oswal
IndusInd Bank Posts Strong 4QFY26 Results, Boosts Earnings Outlook
IndusInd Bank (IIB) released its fourth-quarter financial results for fiscal year 2026, showcasing a significant improvement in its performance. The bank reported a profit after tax (PAT) of INR5.9 billion, a substantial increase from the research firm's estimate of INR1.2 billion.
The bank's net interest income (NII) grew by 43% year-over-year (YoY) to INR43.7 billion, although it dipped by 4.2% quarter-over-quarter (QoQ). The net interest margin (NIM) expanded by 4 basis points (bp) QoQ to 3.39%, with the adjusted NIM standing at 3.35% in the third quarter of fiscal year 2026. Other income remained flat QoQ, missing the research firm's estimate by 4%.
Operating expenses declined by 11% YoY and 5% QoQ to INR37.9 billion, which was 4% lower than the research firm's estimate. This reduction in operating expenses was a key factor contributing to the bank's improved PAT.
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| Metric | Research Firm's Estimate | Actual | % Change (YoY) | % Change (QoQ) |
|---|---|---|---|---|
| PAT (INR billion) | 1.2 | 5.9 | - | - |
| NII (INR billion) | - | 43.7 | 43% | -4.2% |
| NIM (bps) | - | 3.39 | - | +4bps |
| Other Income (INR billion) | - | 8.4 | - | - |
| Operating Expenses (INR billion) | 39.4 | 37.9 | -11% | -5% |
The research firm has raised its earnings forecast for IndusInd Bank by 14% and 18% for fiscal year 2027 and 2028, respectively. It has also projected the bank's return on assets (RoA) and return on equity (RoE) at 0.7% and 5.6% for fiscal year 2027. The research firm has reiterated its neutral rating for the bank with a target price of INR950, premised on 1.1 times its estimated book value as of September 2027.
Investor Takeaway
Maintain a neutral rating for IndusInd Bank with a target price of Rs 950.
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