Can worst Sensex performer of 2024 deliver healthy returns in 2025?

The worst Sensex performer of 2024 eroded investor wealth by 38 per cent in 2024 so far. Can 2025 be different? The private bank has been under pressure, hitting a 52-week low of Rs 965.55 last week, as the mid-sized bank recently reported the weakest Q2 earnings among peers amid margin contraction due to slowdown in the MFI space and elevated credit cost.

As per publicly available data with Trendlyne, the stock still has 26 'Strong buy', four 'Buy', 10 'Hold' and two 'Sell' calls. This is IndusInd Bank Ltd. The price targets on the stock suggests 15-65 per cent potential upside. Goldman Sachs in a note this month said lenders will show varying asset quality outcomes this cycle and investors will have a stock-specific focus as the cycle plays out. The brokerage has IndusInd Bank among its preferred banking picks as it feels the market cap loss has been much larger than the underlying stress or EPS cuts.

Nomura India, which met FPIs in Singapore and Tokyo this month said it found lower interest towards owning mid-sized banks including IndusInd Bank than it saw previously.

"Asset quality concerns (especially in microfinance and broader unsecured retail) keep investors at bay here, despite these
banks being relatively better-off on NIMs against larger banks on potential rate cuts going ahead. We found investors to be especially concerned over MFI asset quality, and relatively fewer takers here, despite steep stock price corrections across the space," it said. This brokerage has a 'neutral' rating on IndusInd Bank with a target price of Rs 1,220.

MOFSL said banks with shorter-duration deposits stand to benefit in a declining rate environment, as they can reprice their liabilities more quickly. "We have thus assessed the ALM profiles of key banks under our coverage and found that banks such as PNB, IndusInd Bank, and Canara Bank are better positioned in this regard," it said. That said, IndusInd Bank is not among MOFSL's banking picks.

BNP Paribas has a target price of Rs 1,300 on IndusInd Bank. The bank stock is not among its preferred picks. UBS has a 'neutral' rating on the stock. It has cut its target price to Rs 1,150 per share from Rs 1,350 per share. Kotak, meanwhile, has a target of Rs 1,650 on the stock.