Investors who are looking for a blue chip stock which can become a multibagger can consider a buy of IndusInd Bank.
Why is IndusInd Bank a blue chip stock?
IndusIndia bank has a well-diversified lending portfolio but it it’s loan share across segments is small. A widening of the portfolio, focus on cross-sell and strong trailing network expansion will help the Bank accelerate loan growth.
Since Ramesh Sobti joined as CEO in 2007-08, the Bank has gone from being a vehicle financier to having a comprehensive product portfolio across retail and corporate segments. Its profile is similar to other large private banks like HDFC Bank.
IndusInd Bank will be multibagger: Morgan Stanley
Morgan Stanley has issued a research report in which it has called the Bank a ‘Mega-cap’. The stock to double in three years time and become a mega-cap by financial year 2020.
The stock has a target price of Rs 1,600. Morgan Stanley is overweight on the stock. It expects earnings growth to accelerate and premium valuations to sustain.
Morgan Stanley expects the Bank’s low-cost deposits to increase going ahead as the bank benefits from increasing dominance with home markets and higher cross sell with vehicle finance/rural customers.
Merger of IndusInd Bank with SKS/ Bharat Financial Inclusion
There may be a merger with Bharat Financial Inclusion. The management of Bharat Financial Inclusion has said that it is looking to grow business relationship with the Bank.