Shares of IndusInd Bank Ltd. gained as much as 3% on Friday, December 27, after the Mumbai-based private lender announced plans to sell part of its microfinance loans.
The lender in an exchange filing said that it has put up microfinance loans worth ₹1,573 crore for sale. Reserve price for the same has been fixed as ₹85 crore or 5.4% of the total stress pool being sold.
At the end of the September quarter, gross NPA in the MFI portfolio for IndusInd Bank stood at ₹2,259 crore. Based on this, the amount of loans put on sale, amount to 69.6% of the MFI NPA at the end of the September quarter.
As per the calculations of CNBC-TV18, the average ticket size is ₹14,820 per account.
Brokerage firm DAM Capital maintained its “buy” rating on IndusInd Bank on Thursday. However, the brokerage cut its price target to ₹1,200 from ₹1,600 earlier.
DAM Capital wrote in its note that IndusInd Bank will continue to face profitability pressures in the second half of the current financial year due to the ongoing challenges in the MFI space, slowdown in loan growth and pressure on income.
The brokerage expects IndusInd’s Return on Assets (RoA) would remain in the range of 1% for the second half of the year and therefore, it has cut IndusInd’s Earnings Per Share (EPS) estimates sharply by 18%, 14% and 13% over financial year 2025, 2026 and 2027 respectively.
DAM Capital does see a 27% potential upside, despite the price target cut on IndusInd Bank due to stress likely peaking and bottoming in the second half of financial year 2025, interest rate cut to provide relative beneficiary and correction in the Credit-Deposit ratio.
“IndusInd Bank could see loan growth dipping to 10%-12% (we estimate 12% YoY) as MFI book de-growth is likely to continue, with tepid environment in certain segments of vehicle finance like CVs,” DAM Capital wrote in its note.
Out of the 50 analysts that have coverage on IndusInd Bank, 37 of them have a “buy” rating, 11 say “hold”, while two have a “sell” recommendation.
Shares of IndusInd Bank are up 3.5% and are among the top gainers on the Nifty 50 index on Friday. However, on a year-to-date basis, the stock is down 42%, making it the worst performing stock on the index this year.
Content retrieved from: https://www.cnbctv18.com/market/indusind-bank-share-price-worst-nifty-50-performer-2024-mfi-loan-sale-plan-npa-target-cut-19530431.htm.
