IndusInd Bank gains 1.5% on Motilal Oswal buy report

Private sector lender IndusInd Bank gained as much as 1.5 percent to touch an intraday high of rs 421 on Monday as Motilal Oswal has recommended a buy rating on the stock with a target price of Rs 500 .

According to the research report, strong capitalisation, healthy business growth, margin expansion and healthy asset quality outlook are the key positives for the stock.

Motilal Oswal has upgraded the bank's earnings per share for FY14 by 8 percent to factor in higher margins.

"IndusInd continues to enjoy strong growth (35 percent+ CAGR over last three years) and superior asset quality (gross non-performing asset of 0.8 percent) in CV loans (24 percent of total book), despite sector slowdown. The underlying success factors are: (1) strong credit appraisal, (2) high repeat business, and (3) focus on the lower-stress SRTO segment (small road transport operators). In corporate loans segment, IIB's asset quality is helped by (1) diversified loan book, and (2) low proportion of term/unsecured loans. Management is confident of maintaining healthy loan growth of 25-30% and superior asset quality (which would keep credit cost under control)," the report says.

At 11:59 hours IST, the stock rose 0.81 percent to Rs 418.25 on the Bombay Stock Exchange.

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