Indusind Bank: More Steam Left ?

Looking at the chart of Indusind Bank (CMP:925), it has strong support zone of around 860-848 zone & below that 823-818 zone (low probability as of now).

In fact, after recent spate of corrections (along with the market), it has already took support of 848 area some days ago and now sustaining over 930, it could easily target 960 zone immediately. Consecutive closing above 960-975 zone, it may target 1010 in the short term. Its mid term target may be 1050-1075 and in the long term, it may go to 1180-1250 zone. (For all these to happen, technically, it has to sustain firmly over 975 zone).

Apart from immediate trigger of  fund raising of INR 500 cr by way of private placement of bonds, it has the potential to grow at least 30% CAGR in FY:15-17 on the back of acceleration in loan growth (specially CV business), NIM expansion, moderation in credit cost, improvement in cost metrics and superb emphasis on cross sells (third party products). It is also expanding its branch network very fast and may also enter broking business in an inorganic way. Forthcoming RBI policy meet may also bring some relief on its overall cost of funds (as it depends largely on wholesale funding - RBI's LAF window like most other new generation banks). Being a new generation bank, it has comparatively cleaner asset/NPA book also. Budget clarification of FDI-FII holdings in private banks (which will be converted in law/rule in the forthcoming parliament session), may also help some private banks, including Indusind.

But considering all the above factors, it has already rallied (YOY- more than 80%), outperforming the broader market to a great extent. Thus, technically at least two consecutive closing above 975 zone is required for it to reach 1050-1075 zone in the mid term.

As par BG Model of quick techno/funda metrics, median valuation of Indusind Bank is around 780 considering its actual TTM EPS of 31.98. But by considering probable FWD EPS of 55 (FY-17), median valuation is around 1025 under the current market conditions.

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	LONG TERM	SHORT TERM	MEDIAN VALUE	200-DEMA	10-DEMA
INDUSINDBK	31.98	170.55	23.56	743.59	817.59	780.59	733.86	887.2

INDUSINDBK

55

170.55

23.56

975.16

1072.21

1023.68

733.86

887.2