Shares of Indusind Bank rose 5 percent on Friday on reports that the Reserve Bank of India has given approval to promoter Hinduja Group to increase its stake in the bank.
According to Business Standard, the Mauritius-based promoter company of Hinduja already has RBI approval to increase shareholding. The central bank had allowed promoters to own up to 26 percent of a bank by November 2021.
During Friday’s trading, the stock opened at a price of Rs. 1,102.05 per share against the previous close of Rs. 1075.40 per share and continued to grow during the early trading session to an intraday high of Rs. 1,130. It traded at Rs 1,117.20, up 3.89 per cent, at 10:25 am on the BSE.
The stock reached a 52-week high of Rs. 1,275.80 on 20 Sep 2022 and a 52 week low of Rs. 763.20 on June 23, 2022, indicating that at current levels, the stock is trading more than 46 percent above its 52-week low and 12.4 percent below its 52-week high.
The stock is down more than 10 percent in the past month. Over the past year, however, it has delivered a positive return of nearly 17 percent. Over the past five years, the stock has posted a negative return of 32 percent.
The Hindujas are likely to stake Rs 8000-10000 crore between June and September to increase their stake in the bank.
The green light given by the regulator is in line with the newly introduced RBI (Acquisition and Holding of Shares or Voting Rights in Banking) directions, 2023, the first time the promoter increased its shareholding to 26 percent.
Meanwhile, on January 18, IndusInd Bank reported a 58 percent 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 growth in net profit was partly driven by a sharp fall in provisions for the quarter by 37 percent to Rs 1,064. 73 crore from Rs 1,654.20 crore a year ago. The decrease in provisions reflects the decrease in bad loans for the lender.
The lender’s net profit was also boosted by healthy 17 percent year-on-year growth in net interest income to Rs 12,923 crore for the quarter. This was due to strong growth in lending. Another boost to profitability was the bank’s stable net interest margin (NIM), despite cost pressures on the liability side. IndusInd Bank reported a 17 basis point increase in its NIM to 4.27 percent.
“IIB’s operational performance remains on track, led by healthy NII growth and controlled provisioning. Asset quality remains stable, driven by fewer slippages. This keeps the outlook for credit costs under control. Management is targeting continued momentum in loan growth and aims to finish FY23 with 20 percent growth. Healthy provisioning in the MFI portfolio and a contingent provisioning buffer of 0.8% of loans will enable a sharp reduction in the cost of borrowing, boosting earnings recovery,” said Motilal Oswal in its recent report to investors.
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