Mumbai: Shares of IndusInd Bank fell 5% Thursday even after brokerage firms raised price forecasts on the private sector lender following its stronger-than-expected second-quarter earnings.
The stock closed at ₹1,161.00 on the BSE, down 4.71% from Wednesday’s close.
Most analysts maintained or raised their price targets on the stock with a median target of ₹1,384.28 over the next 12 months. This is 7.4% higher than previous forecasts and up 19.2% from the stock’s closing price on Thursday.
US investment bank Jefferies maintained its buy target and raised its target by as much as 15% to ₹1,530. Daiwa Securities also raised its target to ₹1,400 per share from ₹1,220 earlier.
Morgan Stanley remains overweight on the stock with a target price of ₹1,475 apiece. “Margin improved quarter-on-quarter despite higher rates,” Morgan Stanley said in a client note. “(The) management guided to growth acceleration and better loan mix, asset quality. We raise estimates while valuations are attractive at current levels.”
In the last five sessions till Wednesday, traders had built long positions anticipating the second quarter earnings. In this period, the stock rose 4% and saw a 12.3% increase in net open interest (OI) positions to 26.1 million shares.
“Prior to the result, the OI interest activity had spiked in as OI shot up despite stock broadly being in a range of ₹1,170-1,120,” said Viraj Vyas, technical and derivatives analyst at Ashika Institutional Equities. “In the near term, if the stock remains below ₹1,200, it may be under pressure.”
In the past 14 sessions, the stock had advanced nearly 10% and yielded nearly 50% returns from its lows in July to the highs of ₹1,275.80 in September.
JP Morgan and Credit Suisse predict a 9-12% upside. Each sees the stock touching ₹1,400.
“We expect FY23 RoE at more than 16% on improved operating performance and moderation of credit cost,” stated Credit Suisse in a client note.
“Q2 gives confidence in the bank coming back to normalised RoE of 15-16% by FY24/25 while valuations remain undemanding,” said JP Morgan.
Of the 49 analysts tracking the stock, 42 of them have a positive rating.
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