IndusInd Bank crash: 'If you had invested Rs 1,000 in Sep 2014...', financial planner sheds light on its performance

IndusInd Bank, India's fifth largest private bank, suffered a significant setback on Tuesday when its stock experienced a record decline of over 27%.

This drop was a result of the bank's recent disclosure of a substantial accounting discrepancy stemming from an internal review of forex derivative transactions. The investigation uncovered an accounting mismatch totaling Rs 1,577 crore (post-tax), representing approximately 2.35% of the bank's net worth as of December 2024.

In response to this finding, shares of IndusInd Bank plummeted by 27% on Tuesday, reaching a new 52-week low and closing at Rs 655.95 per share, the lowest level seen since November 2020.CA Nitin Kaushik, in a social post on X, noted: "IndusInd Bank – A decade of zero returns!

If you had invested Rs 1,000 in Sep 2014, it would still be ₹1000 in 2025. No growth in 10+ years.

🔴 Stock fell 27% due to accounting issues

🔴 50% promoter holdings are pledged

🔴 CFO resigned, CEO got just a 1-year extension from RBI

A stock trading below book value doesn’t always mean it’s a bargain. Do your research before investing!"

As of 2025, IndusInd Bank has experienced a decrease of more than 30% in its stock value. Over the course of one year, the stock has declined by 56%, with a further drop of over 53% in the last six months.

Why happened in IndusInd Bank?

IndusInd Bank stock experienced a decline on Tuesday following a significant 6% drop on Monday, attributed to the news that the bank's CEO, Sumant Kathpalia, received only a 1-year extension from the Reserve Bank of India (RBI) instead of the recommended 3-year term by the bank's board. Additionally, weak earnings in the third quarter resulted in a 39% year-on-year decrease in net profit, while non-performing assets increased.

IndusInd Bank backstory

In 2023, the Reserve Bank of India (RBI) issued new directives regarding banks' investment portfolios, which became effective on April 1, 2024. Previously, banks were allowed to conduct internal swaps on their asset liability management and treasury desks, exchanging one cash flow for another. If these swaps were terminated early, any profits made were accounted for, while losses were not recorded. However, IndusInd Bank miscalculated the hedging costs associated with foreign exchange transactions over the past five to seven years. A recent internal review revealed this oversight, resulting in an expected impact on the bank's net worth equivalent to 2.35% or approximately Rs 2,100 crore.

What lies ahead?

IndusInd Bank Ltd. saw its shares rise by 4.43% on Wednesday, closing at Rs 685 on the NSE. The stock has experienced a decline of nearly 30% year-to-date. The bank's valuation is now comparable to that of many mid-sized state-run banks. Several brokerages are approaching this stock with caution due to governance concerns. Morgan Stanley has highlighted potential downside risks, Macquarie has raised questions about internal processes, and Kotak has downgraded the stock to 'reduce', cautioning that it may take several quarters to restore credibility.