Shares of IndusInd Bank climbed over 5% in intraday trade on Friday amid a report the Hinduja group is planning to raise shareholding in the private sector lender. Hinduja Group is likely to increase its stake in IndusInd Bank to 26% from the existing 16.51%, with an investment of ₹10,000 crore, as per a report.

Cheering the news, IndusInd Bank share price opened higher for the second day at ₹1,102.05, up 2.5% against the previous closing price of ₹1,075.40 on the BSE. During the session so far, the banking stock gained as much as 5% to hit a high of ₹1,130, driven by surge in volume trade. The volume trade doubled to 2.56 lakh as compared to the two-week average volume of 1.28 lakh stocks. The market capitalisation stood at ₹84,543 at the time of reporting.  

In comparison, the BSE Sensex was trading 362 points higher at 60,294 levels, while the BSE Bankex index was up 0.5%. In the banking space, IndusInd Bank was the top gainer, followed by HDFC Bank, Bank of Baroda, State Bank of India (SBI), among others.

As per report, Hinduja’s Mauritius-based promoter entity, IndusInd International Holdings Limited, is planning to submit application to the Reserve Bank of India (RBI) to raise stake in the private sector lender. In November 2021, the RBI had revised guidelines on private bank ownerships, allowing promoters to own as much as 26% in a bank.

IndusInd Bank on January 18 reported third quarter earnings, which topped analysts’ estimates on the back of sharp fall in provisions for bad loans. The private bank reported 58% growth in its consolidated net profit to ₹1,963.54 crore in the December quarter of 2022 compared with the corresponding period a year ago. The net interest income (NII) of the Mumbai-based private sector lender rose 18% on a year-on-year basis to ₹4,495 crore, while the net interest margin improved by 17 basis points to 4.27% compared with the year-ago period. The provisions for bad loans fell 37% to ₹1,064.73 crore from ₹1,654.20 crore a year ago.

Post Q3 result, ICICI Securities has given a “Buy” rating on IndusInd Bank with an unchanged price target of ₹1,223, citing acceleration in retail advance growth and a decline in provisions. The brokerage highlighted that higher opex towards franchise investment and rise in credit cost remained key risks for the bank.

LKP Securities also assigned a “Buy” rating to the bank with a positive outlook. It has given a 12-month price target of ₹1,473, citing outperforming growth guidance and strong margins. The bank’s management has kept intact guidance on the credit growth of around 20% for FY23. “Core operating performance of the Indusind Bank remains healthy. A higher contingent buffer is likely to safeguard the bank from credit disruption from various restructuring schemes. We retain our rating to BUY with a price target of ₹1473 (based on 1.8x FY24E Adj. BVPS of ₹818),” it said in a note.

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