Shares of IndusInd Bank plummeted nearly 23 per cent after it reported discrepancies in derivative portfolio, which could lead to an adverse impact on its net worth by ₹1,530 crore.
IndusInd shares tumbled 21.54 per cent to trade at ₹706.50 as at 10.53 am, after hitting a low of ₹696.65 on Tuesday. The stock has experienced a steep fall over 55 per cent from the peak of ₹1,576.35 on the NSE.
The bank’s net worth stood at ₹65,102 crore as of December 2024.
The bank had faced multiple negative events including MFI stress, CFO resignation, RBI cutting CEO’s term with only one year extension, and the latest earnings impact due to discrepancies in its derivative accounts. Brokerages believe that these events will shake investors confidence and have slashed target prices on the stock. However, the stock has plummeted beyond the estimates, continuing downtrend for the fifth consecutive trading session.
Brokerages downgrade ratings, revise target prices
Analysts expect the bank could report a loss in Q4FY25 which would hit overall earnings by 25 per cent.
Nuvama Institutional Equities have downgraded the stock to reduce at a revised target price of ₹750. “A negative derivatives’ disclosure has the potential to unnerve investors more than a back-dated NPL disclosure,” it said.
“The time-line is discomforting—the CFO resigned just before the Q3 earnings, the CEO recently got a one-year extension instead of three and now a derivatives-induced dislocation. We believe IndusInd’s credibility and earnings shall be impacted,” the brokerage added.
Elara Capital has downgraded the stock to sell from accumulate at a lowered target price of ₹830.
Motilal Oswal has downgraded the stock to neutral at a revised target price of ₹925. The brokerage believes the board will expedite the process of evaluating both internal and external candidates for a suitable successor, which should help alleviate concerns and improve confidence in the bank’s operations.
DAM Capital has downgraded from buy to neutral at a target price of ₹920. “The uncertainty surrounding management continuity, asset quality and the bank’s business model, combined with the unclear outlook for FY26 ROAs, leaves the stock vulnerable to de-rating,” it added.
Emkay Global has recommended add rating (at revised target price of ₹875) from the medium-to-long term perspective, taking comfort from the reasonable valuations for a bank capable of delivering higher RoA (1.4-1.6 per cent) over FY26-27E as the asset quality tide takes a turn for the better.
ICICI Securities analysts have maintained recent downgrading on IndusInd at reduce at an unchanged target price of ₹850. They emphasised that discrepancies reflect poorly on internal control.
Global brokerage Citi has maintained buy at a reduced target price of ₹1,160, flagging that the recent events raised risk perception and impact on disclosed borrowings cost. Macquarie also retained buy call at a target price cut to ₹1,210.
