Hinduja Group could get RBI nod to increase stake in IndusInd Bank; Stock Nears 52-week high

Hinduja Group could get RBI nod to increase stake in IndusInd Bank; Stock Nears 52-week high

Hinduja Group could raise its stake in IndusInd Bank and RBI could approve the move, as per media reports. Hinduja Group currently owns 17 percent stake in IndusInd Bank and has asked for RBI permission to increase it to 26 percent. IndusInd Bank is among top performance private banks in India and it has witnessed strong growth in almost all the segments over the past few years. Hinduja Group is planning to invest Rs 10,000 crore in IndusInd Bank and for this deal, RBI permission would be needed. Hinduja Group is aiming to close the deal by second half of FY24. As reports of possible RBI approval emerged, IndusInd Bank stock registered three percent jump during the trading session.

Hinduja Group currently owns almost 17 percent stake in IndusInd Bank via two entities, IndusInd International Holdings with 12.58% stake and IndusInd Limited with 3.92% percent stake. Earlier this year, the Reserve Bank of India (RBI) gave in-principle and conditional approval to IndusInd International Holdings to raise stake in the private bank to 26 percent.

During its latest quarterly numbers, IndusInd Bank reported stable Net Interest Margin, robust loan growth and strong RoA (return on assets). The bank has witnessed improvement in outlook for microfinance and commercial vehicles segment. In its Q42023 report, the bank reported profit after tax at Rs 2,040 crore, up 50 per cent year-on-year (YoY). The PAT jumped by 4 percent quarter-on-quarter. The YoY core operating earnings jumped by 13 percent during last quarter.

IndusInd Bank closed at Rs 1309 after hitting intraday high of Rs 1318. The stock opened at 1272. IndusInd Bank has touched 52-week high and low of Rs 1342 and 763 respectively. The stock is currently trading at P/E ratio of 13.66 and market experts believe that considering the future prospects, the stock is currently undervalued. As per brokerages data on Trendlyne, the average target price for IndusInd Bank is Rs 1410. The stock has recently touched 52-week high and has witnessed 30 percent rally during the past two months.

In Indian private banking space, the major players include ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank and IndusInd Bank. As per reports of major brokerage houses, Indian banking segment is expected to post strong growth over the next few years. The banking sector has emerged strong after dealing with NPAs and majority of public sector and private banks have cleaned their books. Banks have also become prudent in classifying non-performing assets in the recent years as authorities have taken action to clean up the banking system.