Shares of IndusInd Bank Ltd have been under severe pressure ever since the private lender flagged lapses worth over Rs 1,530 crore in its forex derivatives portfolio. Following an internal assessment of processes pertaining to certain segments of its derivative portfolio, the bank anticipates a 2.35 per cent adverse effect on its net worth.
The stock, which recorded a steep 27 per cent on Tuesday (March 11) after its internal review, traded almost flat on Thursday. Last checked, it was up 0.04 per cent at Rs 685. At this price, it has corrected 29.02 per cent in just five trading days.
Avinash Gorakshakar, Director of Research at ProfitMart Securities, said for a private sector lender like IndusInd Bank putting out a statement on the exchange saying there was an accounting process failure is very shocking. "The bank is an institution where we trust and put our money. So, I think clearly that was a very big negative surprise but having said this the management has put on record that the fourth quarter will be a profitable one. Now, if one were to invest in the bank at current levels, I would suggest it's always better to wait for the Q4 numbers and look at the management commentary," the market expert told Business Today TV.
"There's no hurry because you know this stock is not going to go anywhere. It has been beaten down and for any upward moment, I think the market would clearly look at strong data points, financial numbers and the commentary post the Q4 numbers because only then the markets would get confidence," Gorakshakar underscored.
"Although, the promoters have put it on record that they are confident that this kind of incident wouldn't occur again. I think what has happened is there's been a shake-out of confidence on the part of the bank's management. Also, the Reserve Bank of India (RBI) has only permitted a year's extension for the company's managing director unlike what was earlier expected for at least three years. So, I would say that it's better to wait for the Q4 numbers and then I think take a call.
The market veteran mentioned that IndusInd Bank's current situation is not similar to troubled private lender YES Bank Ltd. "The bank (IndusInd) is completely not a similar case to that of YES Bank. But, I think the market has its own way of reacting. So, it's better to wait for the Q4 numbers and then take a call when some more clarity comes in," he stated.