Shares of IndusInd Bank Ltd recovered 15% from their 52-week low in early deals on Wednesday. The banking stock saw its market cap falling below that of YES Bank in the previous session but today's 15% rally from the 52-week low took the market cap comfortably above that of the YES Bank. In the previous session, YES Bank's market cap stood at Rs 51,921 crore and IndusInd Bank's market cap came at Rs 51,106 crore. In the current session, the IndusInd Bank stock fell to a 52-week low of Rs 605.40 with its market cap declining further to Rs 47,201 crore on BSE today. In comparison, market cap of YES Bank stood at Rs 50,918 crore.
But the recovery rally of 15% from the 52-week low pushed the market cap of IndusInd Bank higher to Rs 53,548 crore on BSE in early deals.
With the relief rally, IndusInd Bank snapped five-sessions of losing streak in the current session. The stock slipped to a 52 week low on opening. Then it rose 5.91% from the previous close of Rs 655.95 and climbed 15% from the 52-week low.
However, the stock has entered the oversold zone with its RSI slipping to 13.1 in the current session. The recovery in the stock came after its promoter Ashok Hinduja reportedly asked shareholders not to panic, assuring them of liquidity support to the bank, if needed.
According to reports, CEO Sumant Kathpalia said his bank was looking to offset the losses, arising due to accounting discrepancy in valuations of past derivatives transactions, within the March quarter itself. He also said that the fourth quarter as well as the full year will likely have profit figures. The statement also boosted sentiment around the stock.
The stock ended 27.17% lower at Rs 655.95 on Tuesday against the previous close of Rs 900.60 on BSE.
The stock has taken a hit from two developments.
On Monday, the lender said that during an internal review of its derivative portfolio, it noted some discrepancies in these account balances. The detailed internal review has estimated an adverse impact of approximately 2.35% of bank’s net worth as of December 2024. This could lead to an adverse impact on its net worth by Rs 1,530 crore. The bank’s net worth stood at Rs 65,102 crore as of December 2024.On some discrepancies in these account balances in its derivative portfolio, the lender said it has appointed a reputed external agency to independently review and validate the internal findings, without disclosing details on the nature of the discrepancies.
"The bank's profitability and capital adequacy remains healthy to absorb this "one-time impact," it added.
Second development, which has affected the stock is RBI clearing reappointment of incumbent bank CEO Sumant Kathpalia for one year only against against the board’s application for three years. This is negative, said brokerage Nuvama as it believes IndusInd Bank will likely use the one year to transition to a new CEO.