Why IndusInd Bank Share Price is Falling

Shares of IndusInd Bank fell 5% yesterday after the bank announced its results for the September 2022 quarter.

The bank's results exceeded analyst expectations on almost every front. It reported higher net interest income and an improvement in asset quality. It also reported a growth in its loan book.

So why did the stock fall?

Shares of the bank fell on account of profit booking.

Profit booking happens is when individuals or companies liquidate their holdings to cash out the profits their investments have created.

The stock was trading close to its 52-week high prior to the results. Thus, some profit booking was expected.

Robust Quarterly Results

IndusInd reported a 57% year on year (YoY) jump in net profit for the September 2022 quarter, on account of lower provisions.

Provisions fell 33% YoY to Rs 11.4 bn as asset quality improved.

The bank's gross NPAs stood lower at 2.11% as against 2.35% as in June 2022. Net NPAs also came in lower at 0.6% of net advances as compared to 0.67% as in June 2022.

The private sector bank reported an 18% YoY growth in the core net interest income on the back of an 18% YoY loan growth. Net interest margin widened to 4.24% as against 4.07% in the year-ago period.

Deposits saw an increase of 15% YoY. CASA deposits comprised 42% of total deposits. Advances also grew 18% YoY.

The bank's overall capital adequacy ratio stood at 18%. It will not be looking at raising funds for up to a year.

Management commentary

The bank's Managing Director and Chief Executive Sumant Kathpalia has said the bank will grow its overall loans by 18-20% during the fiscal.

Growth will be steady in mid and small corporates to build a high rated granular portfolio. He is also confident of growing its deposit base in a granular way by industry-beating offerings.

It also plans to reach 2500 branches by the end of the financial year 2023 and 3,500 branches in the next 3 years.

It has guided for the share of CASA deposits to stabilise between 41-43%. NIM will remain in the range of 4.15-4.25% for the financial year 2023.

How IndusInd Bank shares have performed lately

IndusInd Bank shares have declined by almost 6% in the month gone by.

The stock was under pressure in the first half of 2022 due to the selloff in the broader market. All banking stocks fell as FIIs reduced their holdings on account of interest rate hikes.

A whistleblower case also hurt the company's share price.

However, the bank's shares are up more than 26.2% in 2022. It has turned around on the back of stronger than expected results.

The stock touched its 52-week high of Rs 1275.25 on 20 September 2022 and a 52-week low quote of Rs 763 on 23 June 2022.

As of September 2022, promoters owned 16.5% of the bank, while FIIs owned 45.8%.

At the current price, IndusInd Bank trades at a PE multiple of 15.2 and a price to book value multiple of 1.78.

About IndusInd Bank

IndusInd Bank, is an Indian bank that offers commercial, transactional and electronic banking products and services.

The bank commenced operations in 1994. It caters to the needs of both consumer and corporate customers. Its technology platform supports multi-channel delivery capabilities.

The bank specialises in retail banking services and is also working on expanding its network of branches all across the country.

To know more about IndusInd Bank, check out its factsheet and quarterly results.

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