Despite posting a better-than-expected Q3FY19 performance, Indusind Bank today fell almost 3% to Rs.1555 and the mood on the counter remains largely negative.
Though the profitability numbers are good, the worry remains over its exposure to IL&FS. The Bank reported a net profit of Rs 985 crore, up 5% (YoY) but if there had been no IL&FS crisis leading to more provision, the net profit would have risen 23%.
The Bank, in current Q3 made a continent provision of Rs.225 crore for IL&FS’ holding company and this along with the Q2 provisioning, takes the tally to Rs.600 crore. Its total exposure to the beleaguered group stands at Rs.3000 crore.
The IL&FS shadow will continue to remain as the Bank expects most of its to turn bad and will need to make more provisioning. Another 40% or Rs.400 crore additional provisioning will be required. And this is bound to impact growth – the main overhang keeping the price in the red.
In terms of asset quality, Gross NPA is at 1.13% v/s 1.09% and Net NPA at 0.59% v/s 0.48% (QoQ).