IndusInd Bank shares tank 20% after another round of downgrades; stock halves from peak

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IndusInd Bank shares tank 20% after another round of downgrades; stock halves from peak

This is the biggest single day fall for shares of IndusInd Bank since March 2020. With this fall, the stock has declined to its lowest level since November 2020.





IndusInd Bank shares tank 20% after another round of downgrades; stock halves from peak
Shares of Mumbai-based private lender IndusInd Bank Ltd. fell 20% on Tuesday, after more analysts who have coverage on the lender have issued downgrades and cut their price target on the stock. This, after the bank informed the exchanges of another negative development on Monday, March 10.

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IndusInd Bank, after market closing on Monday, informed the exchanges that it has noted discrepancies during its detailed internal process review, which relates to its deriative portfolio or internal positions taken to hedge forex deposits or borrowings.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 testfor 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).

  
by Taboola
Sponsored LinksThe management highlighted that the one-year tenor extension could be possibly due to low confidence on leadership skills by the Reserve Bank of India. They said that board will take a call on CEO extension in the future and the current CEO remains committed to serve the one year term. Trends here remain a key monitorable, the brokerage said.

Brokerage firm Emkay Global has downgraded IndusInd Bank to "add" from its earlier rating of "buy", slashing its price target by 22% to ₹875.

This follows the lender hosting an analyst call on March 10 to discuss the impact of huge accounting discrepancies observed in its forex derivatives portfolio, which is expected to have an adverse impact of 2.35% on its net worth as of December 2024 (post tax: ₹1,580 crore). This is based on preliminary findings, and the final impact may vary following completion of the external audit in Q4FY25.

Nuvama believes IndusInd Bank's credibility and earnings will likely be impacted. The brokerage house has downgraded the bank to "reduce" from its earlier "hold" rating and slashed the price target to ₹750.

The brokerage believes 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.

DAM Capital has also downgraded the stock to "neutral" from its earlier rating of "buy" and cut its price target on the stock to ₹920 from ₹1,200 earlier. It said that although the bank's valuations appear cheap, they don't make a compelling case, given the ongoing issues.

IndusInd Bank is also vulnerable to de-rating due to uncertainties surrounding the management continuity, asset quality, the bank's business model and an unclear outlook for its Return on Assets (RoA) for financial year 2026.

Another downgrade has come from Motilal Oswal, who has downgraded the stock to "neutral" and cut its price target to ₹925 from ₹1,100 earlier.

Out of the 51 analysts that have coverage on IndusInd Bank, 26 of them have a "buy" rating, 17 of them have a "hold" rating, while eight of them have a "sell" recommendation.

Shares of IndusInd Bank are currently in a 20% lower circuit at ₹720.35. The stock is down 55% from its recent high of ₹1,576.visit :business-strategy-conferences.scifat.com

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