Here's Why IndusInd Bank's Net Profit Doubled in the June Quarter

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  
  • Home
  • Views On News
  • Jul 28, 2021 - Here's Why IndusInd Bank's Net Profit Doubled in the June Quarter

Here's Why IndusInd Bank's Net Profit Doubled in the June Quarter

Jul 28, 2021

Shares of IndusInd Bank surged over 3% and remained in the top performer in the Nifty 50 index.

The stock climbed in today's trade after the bank posted a strong number for the first quarter of the year 2021-22.

IndusInd Bank's standalone net profit more than doubled and surged 111.7% in the first quarter led by lower provisions and robust growth in net interest income.

For the quarter ended June 2021, the lender reported standalone net profit of Rs 9.7 bn compared to Rs 4.6 bn in the same quarter of last fiscal.

Rise in net interest income aid growth in the quarter

The company's net interest income increased by a similar 7.7% to Rs 35.6 bn in the April to June 2021 quarter from Rs 33.1 bn in the same period last fiscal.

Net interest margin was lower at 4.1 bn as on 30 June 2021 from 4.3% a year ago.

In a statement on Tuesday, the bank said this was due to lower credit offtake and surplus liquidity placed under repo with Reserve Bank of India (RBI).

Other income jumped up by 17.2% on a year on year (YoY) basis to Rs 17.8 bn during the quarter.

Its total income grew by 7.8% in the first quarter of the fiscal to Rs 93.6 bn against Rs 86.8 bn a year ago.

--- Advertisement ---
Releasing Shortly: 3 Backdoor Stocks to Play the 15x EV Opportunity

In just a few short days from now, we will be releasing our latest special report on Electric Vehicles...

3 Backdoor Stocks to Play the 15x EV Opportunity

Now, this special report, will be released at our upcoming The Electric Vehicles Gold Rush event...

I invite you to join the event...and find out how you can claim a copy for yourself.

To know more about this FREE event, please visit here...
------------------------------

Asset quality deteriorated amid the second wave of the Covid-19 pandemic

IndusInd Bank's asset quality worsened as gross non-performing asset (NPA) assets rose to Rs 61.6 bn or 2.9% of gross advances as on 30 June 2021 from 2.5% a year ago and 2.7% as on 31 March 2021.

Net NPAs were at almost the same level at 0.8% of net advances as on 30 June 2021 from 0.9% a year ago. However, on a sequential basis it was much higher compared to 0.7% as on 31 March 2021.

In the June quarter, the bank added Rs 27.6 bn worth bad loans, owing to collection issues during the quarter. Of this, Rs 23.4 bn came from the consumer finance book.

IndusInd Bank hopes for a quick revival after a covid-ravaged quarter

IndusInd Bank saw all the possible trouble that lenders faced during the second wave of the pandemic, from increase in stress to lack of growth opportunities.

But the bank's management believes that defaults will reduce, giving it confidence to increase disbursements in the coming months.

Sumant Kathpalia, the bank's managing director and chief executive officer, said he derives confidence in growth from the improvement in collections since June and believes the robustness of the corporate loan book will support the balance sheet.

--- Advertisement ---
The Rebirth of India

3 Hidden Forces are Converging for the First Time Ever...

This convergence is going to unleash a once-in-a-generation wealth boom.

A wealth boom that could potentially mint countless new dollar millionaires as the stocks at the heart of this event return thousands of percent over the long term.

It's a story of ground-breaking consequences that cannot be ignored.

Our co-head of research, Tanushree believes, those who invest in the companies at the heart of this event could turn a small stake into generational wealth.

Just head to this page to get more details
------------------------------

For the June quarter, though, IndusInd Bank hardly grew its loan book.

On a YoY basis, the growth was at 6.6%, mainly due to a low base. Last year's loan growth was a mere 2% as a nationwide lockdown hit business.

This impacted its margins as the bank had to carry over Rs 120 bn worth of excess liquidity from the previous quarter. Core interest income growth, too, was underwhelming due to the same.

What is behind the Rs 9.7 bn net profit for the quarter that was much higher than analysts' estimates?

This brings us to provisions. IndusInd Bank set aside Rs 18.5 bn as provisions, marginally lower than the previous quarter despite a 6.7% increase in its bad loan pile.

The bank also reported a rise in restructured loan book, which now stands at 2.8% of the total.

The management has said that it holds Rs 5.1 bn provisions specifically towards pandemic-related stress and does not see an increase in provisioning going forward.

To be fair, fresh slippages are down sequentially and the bank does not expect restructured loans to turn bad.

The bank's biggest pain point has been unsecured credit card loans and loans to buyers of small commercial vehicles and three-wheelers. These categories saw the biggest increase in delinquencies during the June quarter.

Given that vehicle finance has a large share in the loan book, IndusInd Bank needs this segment to bounce back fast. According to Kathpalia, the bank's collections look promising. He expects growth to pick up soon.

IndusInd Bank is hopeful of better days ahead as the second wave of the pandemic recedes and restrictions are removed progressively.

Join Today: Equitymaster is on Telegram. Join FREE Today for Exclusive market Updates

How the stock markets reacted to IndusInd Bank

Shares of IndusInd Bank opened the day at Rs 995 on the BSE and Rs 992 on the NSE.

At the time of writing, the company's shares were trading up by 1.4% on the BSE.

At its current price, it is trading at a P/E of 26.

The share touched its 52-week high of Rs 1,119.2 and 52-week low of Rs 483.5 on 25 February 2021 and 24 September 2020, respectively.

Over the last 30 days, the IndusInd Bank share price is down 2.2%. Over the last one year, the company's share price is up 94.6%.

About IndusInd Bank

IndusInd Bank, which commenced operations in 1994, caters to the needs of both consumer and corporate customers. Its technology platform supports multi-channel delivery capabilities.

As on 31 March 2021, IndusInd Bank has 2,015 branches and 2,872 ATMs spread across geographical locations of the country. The bank also has representative offices in London, Dubai and Abu Dhabi.

IndusInd Bank was included in the NSE Nifty benchmark index on 1 April 2013.

For more details about the bank, you can have a look at IndusInd Bank's fact sheet and IndusInd Bank's quarterly results on our website.

For a sector overview, you can read our banking sector report.

You can also compare IndusInd Bank with its peers on our website:

IndusInd Bank vs Yes Bank

IndusInd Bank vs ICICI Bank

IndusInd Bank vs Kotak Mahindra Bank

IndusInd Bank vs HDFC Bank

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Equitymaster requests your view! Post a comment on "Here's Why IndusInd Bank's Net Profit Doubled in the June Quarter". Click here!

  

More Views on News

A Great Quarter for IndusInd Bank: Can the Stock Go Up More? (Views On News)

May 3, 2021

Key takeaways from IndusInd Bank's March quarter results.

INDUSIND BANK Announces Quarterly Results (3QFY21); Net Profit Down 34.4% (Quarterly Result Update)

Feb 1, 2021 | Updated on Feb 1, 2021

For the quarter ended December 2020, INDUSIND BANK has posted a net profit of Rs 9 bn (down 34.4% YoY). Sales on the other hand came in at Rs 72 bn (down 0.6% YoY). Read on for a complete analysis of INDUSIND BANK's quarterly results.

INDUSIND BANK Announces Quarterly Results (2QFY21); Net Profit Down 53.2% (Quarterly Result Update)

Nov 4, 2020 | Updated on Nov 4, 2020

For the quarter ended September 2020, INDUSIND BANK has posted a net profit of Rs 6 bn (down 53.2% YoY). Sales on the other hand came in at Rs 72 bn (up 0.4% YoY). Read on for a complete analysis of INDUSIND BANK's quarterly results.

5 Indian Banks with the Lowest NPAs. Here's How they Did It... (Views On News)

Sep 27, 2021

These banks have managed to maintain their asset quality even in the middle of a pandemic.

PNB Reports an Over Three-Fold Jump in Net Profit as Provisions Fall (Views On News)

Aug 3, 2021

The reduction in provisions for bad loans and asset quality stability may have aided the lender's earnings.

More Views on News

Most Popular

All You Need to Know About Primary and Secondary Markets

A look at the various types of primary and secondary markets and the key differences between them.

Is it Time to Switch from Tata Power to NTPC? (Profit Hunter)

Oct 11, 2021

Given the huge run up in Tata Power, does it make sense to switch to NTPC?

This Proxy EV Stock Just got a Power Crisis Boost (Profit Hunter)

Oct 8, 2021

After months of research, I've come across few stocks that excite me far more than the mainstream electric vehicle companies.

Rs 1 Lakh Invested in These Cryptos at the Start of 2021 Became Rs... (Views On News)

Oct 8, 2021

These cryptos would have multiplied investors' wealth by as much as 10,000% in just nine months.

Top 5 'Digital India' Stocks (Views On News)

Oct 6, 2021

These companies are leading the Government's US$1 tn 'Digital India' initiative.

More

Become A Smarter Investor
In Just 5 Minutes

Multibagger Stock Guide 2022
Get our special report Multibagger Stocks Guide (2022 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

INDUSIND BANK SHARE PRICE


Oct 18, 2021 09:59 AM

TRACK INDUSIND BANK

  • Track your investment in INDUSIND BANK with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

INDUSIND BANK - PNB COMPARISON

COMPARE INDUSIND BANK WITH

MARKET STATS