CMP 434.20

Target Price 486.00

ISIN: INE095A01012

JAN 10th

, 2013

INDUSIND BANK LTD Result Update: Q3 FY13

BUYBUYBUYBUY

Stock Data

Sector Banking

BSE Code 532187

Face Value / Div. Per Share 10.00

52wk. High / Low (Rs.) 440.80/247.25

Volume (2wk. Avg ) 511000

Market Cap ( Rs in mn ) 226760.95

Annual Estimated Results (A*: Actual / E*: Estimated)

Years FY12A FY13E FY14E

Net Income 53592.00 74492.88 94605.96

NII 27160.30 36144.75 45274.02

Net Profit 8026.10 10431.69 12990.53

EPS 17.16 19.97 24.87

P/E 25.30 21.74 17.46

Shareholding Pattern (%)

1 Year Comparative Graph

BSE SENSEX INDUSIND BANK LTD

SYNOPSIS

IndusInd Bank, which commenced its

operations in 1994, caters to the needs of

both consumer and corporate customers.

Capital Adequacy Ratio (with accrued profit)

as on Dec 31, 2012 was 16.56% as against

15.08% at the end of Dec. 31, 2011.

The CASA ratio improved to 28.67% against

26.50%.

Net Profit was Rs.2672.70 mn as against Rs.

2059.60 mn in the corresponding quarter of

the previous year, up by 29.77%.

IndusInd Bank has 461 branches, and 852

ATMs spread across 320 geographic locations

of the country as on December 31, 2012.

Core Fee Income for the quarter was Rs

3292.90 mn as against Rs 2503.40 mn in the

corresponding quarter of the previous year,

showing a spectacular growth of 32%.

Total deposits as on Dec. 31, 2012 were at Rs.

510980 mn as compared to Rs. 405580 mn in

the corresponding quarter of the previous

year, up by 26%.

IndusInd Bank enhances its core banking

system to Finacle 10.2 version

Net Income & PAT of the company are

expected to grow at a CAGR of 38% and 31%

over 2011 to 2014E respectively.

Peer Groups CMP Market Cap EPS P/E (x) P/BV(x) Dividend

Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)

IndusInd Bank Ltd 434.20 226760.95 17.16 25.30 4.49 22.00

Indian Overseas Bank 92.90 74041.10 12.91 7.20 0.69 45.00

Axis Bank 1348.80 576147.50 109.01 12.37 2.52 160.00

SBI 2521.65 1692140.20 219.40 11.49 2.02 350.00

Investment Highlights

Results updates- Q3 FY13,

The company’s net profit jumps to Rs. 2672.70 million as against Rs. 2059.60 million in the corresponding

quarter ending of previous year, an increase of 29.77%. Revenue for the quarter rose 29.56% to Rs. 18004.90

million from Rs. 13897.40 million, when compared with the prior year period. Reported earnings per share of the

company stood at Rs. 5.12 a share during the quarter, registering 16.02% an increase over previous year period.

Net Interest Income is Rs. 9336.00 millions as against Rs. 6957.70 millions in the corresponding period of the

previous year.

Months Dec-12 Dec-11 % Change

Net Income 18004.90 13897.40 29.56%

PAT 2672.70 2059.60 29.77%

EPS 5.12 4.41 16.02%

Segment Revenue

Particulars (Rs.mn.) Q3 FY13

Wholesale Banking 8594.90

Treasury Operations 4464.20

Retailing Banking 11742.40

Other Banking Operations 59.10

Total 24860.60

Latest Updates

• Total deposits as on December 31, 2012 were at Rs. 510980 mn as compared to Rs. 405580 mn in the

corresponding quarter of the previous year, up by 26%.

• Capital Adequacy Ratio (with accrued profit) as on December 31, 2012 was 16.56% as against 15.08% at the

end of December 30, 2011.

• The CASA (Current Accounts-Savings Accounts) ratio improved to 27.98% against 26.50%.

• IndusInd Bank has 461 branches, and 852ATMs spread across 320 geographic locations of the country as on

December 31, 2012. The Bank also has 2 Representative offices, one each in London and Dubai.

• IndusInd Bank enhances its core banking system to Finacle 10.2 version

IndusInd Bank has enhanced its core banking system to power the Bank’s exponential growth agenda. Built

on new generation technology, Finacle 10.2 enables IndusInd Bank to accelerate innovation and stay ahead of

emerging customer demands. By leveraging Finacle, the Bank personalizes offerings, bundles products and

enriches its segment specific product portfolio.

Company Profile

IndusInd Bank derives its name and inspiration from the Indus Valley civilization. IndusInd Bank, which

commenced its operations in 1994, caters to the needs of both consumer and corporate customers. It has a

robust technology platform supporting multi-channel delivery capabilities. IndusInd Bank has 421 branches, and

735 ATMs spread across 288 geographic locations of the country as on June 30, 2012. The Bank also has 2

Representative offices, one each in London and Dubai.

The Bank believes in driving its business through technology. It has multi-lateral tie-ups with other banks

providing ATM access to its customers across the country. It enjoys clearing bank status for both major stock

exchanges - BSE and NSE - and three major commodity exchanges in the country - MCX, NCDEX, and NMCE.

IndusInd Bank also offers DP facilities for stock and commodity segments. The Bank has been bestowed with the

mandate of being a Settlement Banker for six tea auction centers.

Ratings

‘ICRA AA’ for Lower Tier II subordinate debt program and ‘ICRA AA-‘ for Upper Tier II bond program by ICRA.

‘CRISIL A1+’ for certificate of deposit program by CRISIL. ‘CARE AA’ for Lower Tier II subordinate debt program

by CARE. ‘Fitch AA-‘for Long Term Debt Instruments and ‘Fitch A1+’ for Short Term Debt Instruments by Fitch

Ratings.

Products & services offered

Banking for Individuals

Premier Banking

� Indus Exclusive for Individuals � Indus Select for Individuals

Accounts

� Indus Classic Savings Account

� Indus Easy Savings Account

� Indus Privilege Savings Account

� Indus Young Saver

Deposits

� Sweep - In / Out Deposit

� Young Saver Deposit

� Senior Citizen Scheme

� Regular Recurring Deposit

Loans

� Home Loan

� Small Business Loan

� Car Loan

� Two - wheeler Loan

Debit Cards

� International Classic VISA Debit Card

� International Gold VISA Debit Card

� Maximum Platinum VISA Debit Card

� Indus Money

Investments

� e-Trading

� Bonds

� Mutual Funds

� Suvarna Mudra

Insurance

� Health Insurance

� Motor Insurance

� Home Insurance

� Travel Insurance

Demat

� Demat Account

� ASBA

� ASBA Enabled Branches

Offers

� Debit Card Offers

� Credit Card Offers

� IndusNet & IndusMobile Offer

� Credit Cards

Defence Accounts

� Indus Force

� Indus Force Maxima

Indus Forex

� Indus Forex Card

� Foreign Currency Bank Notes

� Travellers Cheque

� Foreign Currency Demand Draft

Banking for Corporate & Institutions

Coverage

� Corporate & Investment Banking

� Commercial Banking

� Financial Institutions & Public Sector

� Business Banking Group

Investment Banking

� Products/Services

� Global Access

� IndusInd Adds Value

Transaction Banking

� Supply Chain Finance & Services

� Channel Finance

� Dealer Financing

� Vendor Financing

Global Markets

� Money Market Desk

� Currency Option

� Interest Rate Swap (IRS)

� Currency Swap

Capital & Commodities Markets

� Stock Exchange Cell

� Commodities Exchange Cell

� Banker to Public/Rights Issues

� Debenture Trustee

Government & Specialized Accounts

� Indus TASC

� Indus Prime

� Indus LBO

� Indus Escrow

Banking for Business Owners

Business Solutions

� Indus Prestige

� Indus Gold Plus

� Indus Gold

� Indus Silver

Payment & Collection

� Payment Solutions

� Easy Collections

Trade & Foreign Exchange

� Exporters

� Importers

� Inland Trade Services

� Bank Guarantees

Lending Services

� Commercial Vehicle Loan

� Traders Advances

� Three Wheelers Loan

Premium Business Banking

� Indus Exclusive for Business Owners

� Indus Select for Business Owners

Banking for NRIs

Accounts

� NRE Regular Savings Account

� NRO Regular Savings Account

� RFC Account

Deposit Schemes

� NRE Fixed Deposits

� NRO Fixed Deposits

� FCNR Deposits

� RFC Deposits

Remittances

� Telegraphic & Wire Transfers

� Indus Speed Remit

� Indus Fast Remit

� E-Remittance

Investments & Insurance

� Mutual Funds

� Insurance

� Equity Trading for NRIs

� Portfolio Investment Scheme

Value Added Services

� Returning NRIs

� Taxation

� Indus NEAT

� Indus ASSIST

Premier Banking for NRI’s

� Indus Exclusive NRI Program

� Indus Select NRI Program

Online banking

� IndusNet

� ATMs

� E-Statement

� Mobile Alert

� e-Trading

� Indus Online

� Remittance Services

� MF Portfolio Tracker

� Indus Direct

� Mobile top-up

� Mobile Banking

� Fast Forex

Financial Highlight

Balance Sheet

(A*- Actual, E* -Estimations & Rs. In Millions)

FY11 FY12 FY13E FY14E

CAPITAL AND LIABILITIES

Capital 4659.66 4677.02 5222.50 5222.50

Employee Stock Options Outstanding 79.80 109.46 137.92 165.50

Reserves and Surplus 35762.66 42630.60 50978.39 63968.92

Deposits 343653.71 423615.50 508338.60 599839.55

Borrowings 55254.24 86820.13 134050.28 201075.42

Other Liabilities and Provisions 16948.34 18107.98 19918.79 21771.22

Total 456358.41 575960.69 718646.47 892043.11

ASSETS

Cash and Balances with Reserve Bank of India 24560.39 29035.76 33971.84 39407.33

Balances with Banks and Money at Call and Short notice 15685.60 26360.46 44812.78 72148.58

Investments 135508.14 145719.46 160291.41 176320.55

Advances 261656.47 350639.51 448435.44 563943.31

Fixed Assets 5964.59 6567.98 7235.63 7959.19

Other Assets 12983.22 17637.52 23899.37 32264.15

Total 456358.41 575960.69 718646.47 892043.11

Annual Profit & Loss Statement for the period from 2011 to 2014E

Value(Rs.in.mn) FY11 FY12 FY13E FY 14E

Description 12m 12m 12m 12m

Net Income 35893.60 53592.00 74492.88 94605.96

Other Income 7136.60 10117.80 13051.96 15662.35

Total income 43030.20 63709.80 87544.84 110268.31

Interest Expended -22128.70 -36549.50 -51400.09 -64994.29

Net Interest Income 20901.50 27160.30 36144.75 45274.02

Operating Expenses -10084.80 -13430.00 -18474.23 -23178.46

Operating Profit 10816.70 13730.30 17670.52 22095.56

Provisions and Contingencies -2018.90 -1803.80 -2261.83 -2850.33

Profit Before Tax 8797.80 11926.50 15408.69 19245.23

Tax -3024.60 -3900.40 -4977.01 -6254.70

Profit After Tax 5773.20 8026.10 10431.69 12990.53

Equity Capital 4659.70 4677.00 5222.50 5222.50

Reserves 33589.00 40546.70 50978.39 63968.92

Face Value (Rs.) 10.00 10.00 10.00 10.00

EPS 12.39 17.16 19.97 24.87

Quarterly Profit & Loss Statement for the period from 30 June 2012 to 31 Mar 2013E

Value(Rs.in.mn) 30-Jun-12 30-Sep-12 31-Dec-12 31-Mar-13E

Description 3m 3m 3m 3m

Net Income 16320.40 17279.30 18004.90 19265.24

Other Income 3187.80 3204.90 3558.00 3878.22

Total income 19508.20 20484.20 21562.90 23143.46

Interest Expended -11479.40 -12182.00 -12226.90 -13370.08

Net Interest Income 8028.80 8302.20 9336.00 9773.38

Operating Expenses -3988.50 -4104.00 -4614.40 -4816.31

Operating Profit 4040.30 4198.20 4721.60 4957.07

Provisions and Contingencies -535.00 -490.70 -786.80 -684.08

Profit Before Tax 3505.30 3707.50 3934.80 4273.00

Tax -1142.70 -1205.00 -1262.10 -1388.72

Profit After Tax 2362.60 2502.50 2672.70 2884.27

Equity Capital 4689.30 4697.20 5222.50 5222.50

Face Value (Rs.) 10.00 10.00 10.00 10.00

EPS 5.04 5.33 5.12 5.52

Ratio Analysis

Particulars FY11 FY12 FY13E FY14E

EPS (Rs.) 12.39 17.16 19.97 24.87

Operating Profit Margin (%) 30.14% 25.62% 23.72% 23.36%

PAT Margin (%) 16.08% 14.98% 14.00% 13.73%

P/E Ratio (x) 35.05 25.30 21.74 17.46

ROE (%) 15.09% 17.75% 18.56% 18.77%

ROCE (%) 2.47% 2.47% 2.75% 2.97%

Debt-Equity Ratio 10.43 11.29 10.44 9.76

Book Value (Rs.) 82.08 96.69 107.61 132.49

P/BV (x) 5.29 4.49 4.03 3.28

Charts

Outlook and Conclusion

� At the current market price of Rs.434.20, the stock P/E ratio is at 21.74 x FY13E and 17.46 x FY14E

respectively.

� Earning per share (EPS) of the company for the earnings for FY13E and FY14E is seen at Rs. 19.97 and

Rs.24.87 respectively.

� Net Income and PAT of the company are expected to grow at a CAGR of 38% and 31% over 2011 to 2014E

respectively.

� On the basis of EV/EBITDA, the stock trades at 10.44 x for FY13E and 9.76 x for FY14E.

� Price to Book Value of the stock is expected to be at 4.03 x and 3.28 x for FY13E and FY14E respectively.

� We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in

this particular scrip with a target price of Rs. 486.00 for Medium to Long term investment.

Industry Overview

India has a robust banking system, governed by stringent regulations. An intense supervision by the Reserve

Bank of India (RBI) has resulted in stringent regulatory and compliance requirements on capital adequacy and

risk management practices which have strengthened the overall banking system in India.

India’s banking sector includes 86 scheduled commercial banks, 82 regional rural banks, 1,645 urban

cooperative banks (53 scheduled cooperative banks) and 95,765 rural cooperative banks.

Key Statistics

• According to RBI’s ‘Quarterly Statistics on Deposits and Credit of Scheduled Commercial Banks’, December

2011, Nationalised Banks, as a group, accounted for 52.1 per cent of the aggregate deposits, while State Bank

of India (SBI) and its associates accounted for 21.9 per cent. The share of New Private Sector Banks, Old

Private Sector Banks, Foreign Banks, and Regional Rural Banks in aggregate deposits was 13.9 per cent, .8

per cent, 4.5 per cent and 2.9 per cent, respectively.

• Nationalised Banks also held the highest share of 51.2 per cent in the total bank credit followed by SBI and its

associates at 22.5 per cent and New Private Sector Banks at 13.8 per cent. Foreign Banks, Old Private Sector

Banks and Regional Rural Banks had shares of around 5.2 per cent, 4.8 per cent and 2.5 per cent, respectively.

• Another statement released by RBI revealed that banks' advances grew 0.1 per cent to US$ 913 billion in July-

September 2012, while deposits expanded by 1 per cent. The RBI projects credit growth at 17 per cent and

deposit growth at 16 per cent in 2012-13.

• Foreign exchange reserves stood at US$ 294.81 billion for the week ended September 28, 2012 wherein the

value of gold reserves was recorded at US$ 28.133 billion and that of foreign currency assets (FCAs) was at

US$ 259.96 billion.

Recent Developments

• Export-Import Bank of India (Exim Bank) has partnered with IL&FS Financial Services (IFIN) to facilitate

accessibility to Indian companies for CNH bond markets as well as other international bond markets which

are not dominated in US Dollar, Euro and Yen. The memorandum of understanding (MoU) gives broad

clauses of co-operation between the two entities on a bond guarantee facility programme which will facilitate

a credit enhancement mechanism to Indian bond issuers in international bond markets.

• Working further on its innovation finance programme for the micro, small and medium enterprises (MSME)

sector, Small Industries Development Bank of India (SIDBI) has entered into a EUR 53 million (US$ 68.53

million) - loan agreement with KFW Germany. SIDBI aims to promote entrepreneurial innovations in MSME

sector, particularly those involved in clean technologies. The scheme also aims to provide financing

instruments specially customised to the needs of the MSMEs.

• India’s second largest private bank HDFC Bank has opened its first representative office in Abu Dhabi to

render financial services to a large customer base of non-resident Indians (NRIs) staying in the UAE. The new

office will help NRIs open accounts in India and will also offer remittance services, fixed deposits and other

related banking services.

• IDBI Bank has received internationally recognised BS 25999 certificate from Intertek India, a global

certification agency. The bank has become India’s first public sector bank to get certified for its business

continuity management (BCM) process, for comprehensive coverage of major business and support

functions. The honour clearly authenticates bank’s dedication towards customer satisfaction, quality of

services, better performance and regulatory compliance.

• The State Bank of Bikaner & Jaipur (SBBJ) has opened a unique and first-of-its kind financial supermarket in

the city. The branch, which will not be a conventional one, will offer a wide range of diversified products and

services. It will primarily aim at cross-selling by offering non-standard products such as insurance (both life

and general), credit card and mutual funds. The supermarket will sell products of its channel partners

namely SBI Life, Mutual Fund, SBI General and SBI Card, both across the counters and through electronic

means.

• India’s third largest private bank – Axis Bank – has entered into a strategic agreement with Tata AIG General

Insurance wherein the latter would be its corporate agent for general insurance. Tata AIG will leverage on

bank’s wide distribution network to offer general insurance solutions to its clients. This initiative by Axis

Bank aimed at broadening insurance cover options while offering Tata AIG’s proclaimed Customer and

Claims service to its' customers across the country.

Government Initiatives

In order to speed up the process of financial inclusion in India, the RBI has announced setting up of a high-level

committee that would ensure accessible financial services in the country.

The Financial Inclusion Advisory Committee, to work under RBI Deputy Governor K C Chakrabarty, would

formulate suitable regulatory framework to align the twin objectives of financial inclusion and financial stability.

The 11-member panel is expected to acknowledge issues such as developing feasible and sustainable banking

services delivery models and devising products and processes for rural as well as urban consumers outside the

banking network.

About 58.7 per cent households are reported to be availing banking facilities, as per 2011 census.

Road Ahead

Indian banking industry is anticipated to grow exponentially and become the world’s third largest in asset size

(projected at US$ 28,500 billion from the current US$ 1,350 billion) by 2025, according to a report by the Boston

Consulting Group (BCG) India, prepared in association with a leading industry organisation and Indian Banks

Associations (IBA). Driven by 3G and smartphones, mobiles would emerge as the most preferred mediums for

banking wherein they will account for almost 20-30 per cent of the transactions.

Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation for the purchase or sale

of any financial instrument or as an official confirmation of any transaction. The information contained herein is

from publicly available data or other sources believed to be reliable but do not represent that it is accurate or

complete and it should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s affiliates shall

not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the

information contained in this report. This document is provide for assistance only and is not intended to be and must

not alone be taken as the basis for an investment decision.

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