Indusind Bank: 830-820 Might Be Very Good Buying Zone for 911-995 In The Near Term--Strong Earnings Could Help Despite EQ Dilution For QIP

Technical Analysis:

CMP:848

For Investment Purpose:

Buy>830: TGT: 911-995-1025 (1-6M) & 1150 (12M); Trading SL<820

Note: Sustain below 820, IIB might fall to 784 zone, where fresh buying can be initiated again for good average.

Trading Levels (Positional):

For Trading Purpose:

	SL</>5	FROM SLR
		Indusind	CMP	848
			T1	T2	T3	T4	T5	T6	T7	SLR
Strong >	830		850	872	890	911*	940	972	995	<820
Weak <	820		802	784*	778-40	726	715	699	650	>830

Rationale

IIB corrected for the last few days by almost 16% from its recent cyclical high against overall market correction of around 12%. Apart from general market meltdown, other reasons may be IIB's intention of acquiring loan portfolio of RBS (around Rs.6000 cr) and recent QIP issue of similar amount (Rs.5081 cr @857.20 par share).

The other reason may be grant of payment bank license by RBI to certain corporate groups, which might pose some competition to the private banking space. But having said that, a small payment bank can not be the true replacement of a full fledged bank in its true sense.

The QIP proceeds will help the bank to support future growth and to maintain capital adequacy ratio. But, six cr new share issued in QIP mode & to promoters on preferential basis, which may dilute net EPS by around 10% unless supported by sequentially higher income. The bank is actively scrutinizing the loan portfolio of RBS to take a final call shortly.

IIB also recently acquired diamond & jewelry financing business of RBS and is quite confident of  growth in retail financing and CV business along with other fees income (3-rd party product sale).

The bank is also proving digital platform very rapidly in order to enhance the net banking & POS experience.

Going ahead, with expected growth in retail/SME loan book along with sequentially higher CV & corporate loan demand and relatively stable NPA, a strong bank like IIB might be a bright spot in the private banking space.

Valuation As Par BG Metrics:(Approx)

As par current market scenario, median valuation of IIB : 805

Projected fair valuation: 915-1025-1170 (FY:16-18)

SCRIP	EPS(TTM)	BV(Act)	P/E(AVG)	LV	SV	MV	200-DEMA	10-DEMA
INDUSINDBK	32.04	173.97	23	783.78	814.17	798.97	833.61	899.52

INDUSINDBK

41.5

229.25

23

892.01

926.60

909.31

833.61

899.52

INDUSINDBK

52.31

338.15

23

1001.47

1040.31

1020.89

833.61

899.52

INDUSINDBK

68.15

498.75

23

1143.08

1187.41

1165.25

833.61

899.52

Technical Charts: