By- Anurag Tiwari
IndusInd Bank News– Nuvama anticipates a negative impact on IndusInd Bank’s credibility and earnings, leading to a downgrade from “hold” to “reduce”. The brokerage has also slashed the price target to ₹750, citing concerns over the bank’s performance outlook.
Shares of IndusInd Bank Ltd. tumbled 10% in early trading on Tuesday after multiple analysts downgraded the stock and slashed their price targets. The decline followed the bank’s disclosure of another negative development on March 10, further dampening investor sentiment.
After Monday’s market close, IndusInd Bank informed the exchanges that it had identified discrepancies during an internal review. These inconsistencies relate to the bank’s derivative portfolio and internal positions used to hedge forex deposits or borrowings, raising concerns about risk management and compliance.
The lender estimates an adverse impact of 2.35% of its net worth during the first nine months of the current financial year. It plans to take a ₹15,800 crore hit post-tax during the March quarter due to these findings.
Although global brokerage firm Citi has maintained its “buy” rating on IndusInd Bank, it has cut its price target to ₹1,160 from ₹1,378 earlier. It said that the recent developments has led them to cut IndusInd Bank’s earnings estimates for financial year 2025 by 25%.
“Recent developments have raised the risk perception and impacts disclosed borrowings cost too,” the brokerage said.
It also called the developments regarding the succession as a litmus test for IndusInd Bank.
Macquarie also has retained its “buy” rating on IndusInd Bank with a price target of ₹1,210.
According to Macquarie, issues like this create questions on the robustness of banks internal process and compliance. Further, it believes this could be one of the reasons of a sub-optimal CEO tenor extension (one year as against its expectation of three years).
IndusInd Bank Faces Downgrades Amid Leadership Concerns and Forex Derivatives Discrepancies
IndusInd Bank is facing multiple downgrades from brokerage firms following leadership concerns and accounting discrepancies in its forex derivatives portfolio.
Key Developments:
- The bank’s management suggested that the one-year CEO tenure extension might reflect the RBI’s lack of confidence in leadership, though the board will decide on a future extension.
- The lender disclosed forex derivative discrepancies on March 10, which could impact its net worth by 2.35% (₹1,580 crore post-tax) based on preliminary findings. The final impact will be determined after the external audit in Q4FY25.
Brokerage Downgrades and Price Target Cuts:
- Emkay Global downgraded IndusInd Bank to “add” from “buy” and slashed its price target by 22% to ₹875.
- Nuvama downgraded the bank to “reduce” from “hold”, cutting its target price to ₹750, citing concerns over credibility and earnings.
- DAM Capital revised its rating to “neutral” from “buy”, lowering its target price to ₹920 from ₹1,200, stating that the bank’s valuation isn’t compelling amid ongoing issues.
- Motilal Oswal also downgraded the stock to “neutral”, reducing the target price to ₹925 from ₹1,100.
Market Sentiment:
- Out of 51 analysts covering IndusInd Bank, 26 have a “buy” rating, 17 a “hold”, and 8 a “sell” recommendation.
- Stock Performance: IndusInd Bank closed 3.71% lower on Monday at ₹901.95, with a 7% decline so far in 2025.
Key Risks:
- Management continuity concerns with the CEO’s short tenure extension.
- Asset quality uncertainties and the bank’s business model sustainability.
- Return on Assets (RoA) outlook for FY26 remains unclear.
Investors remain cautious as external audit findings and leadership decisions will be crucial in shaping the bank’s future trajectory.
