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Indusind Bank shares rose 5 per cent on Friday on reports that the Reserve Bank of India has granted approval to promoter Hinduja Group to increase its stake in the bank.
According to Business Standard, the Hinduja’s Mauritius-based promoter company already has RBI approval to increase the shareholding. The central bank had allowed promoters to own up to 26 per cent of a bank in November 2021.
During Friday’s trade, the stock opened at a price of Rs. 1,102.05 per share against the previous close of Rs. 1075.40 per share and grew further during the early trading session to touch an intraday high of Rs. 1,130. It was trading at Rs 1,117.20, up by 3.89 per cent, at 10:25 a.m. on the BSE.
The stock touched a 52-week high of Rs. 1,275.80 on September 20, 2022 and a 52-week low of Rs. 763.20 on June 23, 2022, indicating that at the current level, the stock is trading over 46 percent above its 52-week low and 12.4 percent below its 52-week high.
The stock has declined over 10 per cent in the last one month. However, in the past one year, it has given a positive return of nearly 17 per cent. In the last five years, the stock has yielded a negative return of 32 per cent.
The Hindujas are likely to deploy Rs 8000-10000 crore between June and September to increase their shareholding in the bank.
The go-ahead given by the regulator is in line with the newly introduced RBI (Acquisition and Holding of shares or voting rights in Banking companies) Directions, 2023, the first instance of its promoter increasing its shareholding to 26 percent.
Meanwhile, IndusInd Bank on January 18 reported 58 per cent growth in its consolidated net profit for the quarter ending December 2022 to Rs 1,963.54 crore, beating street expectations by a mile.
The net profit growth was partly driven by a sharp 37 percent fall in provisions for the quarter to Rs 1,064. 73 crore from Rs 1,654.20 crore a year ago. The fall in provisioning reflects the drop in bad loans for the lender.
The lender’s net profit was also boosted by a healthy 17 percent year-on-year growth in its net interest income to Rs 12,923 crore for the quarter. This came on the back of robust loan growth. Yet another profitability booster was the bank’s stable net interest margin (NIM) despite cost pressures on the liabilities side. IndusInd Bank reported an expansion of 17 basis points in its NIM to 4.27 percent.
“IIB’s operating performance remains on track, led by healthy NII growth and controlled provisions. Asset quality remains steady, driven by lower slippages. Thus, the outlook for credit cost remains controlled. The management is guiding for continued momentum in loan growth and is looking to end FY23 with a growth of 20 percent. Healthy provisioning in the MFI portfolio and contingent provisioning buffer of 0.8 percent of loans will enable a steep decline in credit cost, thus driving recovery in earnings”, said Motilal Oswal in its recent report to investors.
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