Deven Choksey shares 2-point guide for IndusInd Bank; says this on defence stocks

Deven Choksey, MD at DRChoksey FinServ Pvt, pointed out two immediate key steps for crisis-hit IndusInd Bank Ltd to restore 'normalcy'. "Little disturbing to note few things that whatever the available reserves they have carried in the books, most of it has been wiped off. Unless they recapitalise themselves, I don't think the bank is registering a significantly bigger case for returning to normalcy. You could always write off the loss and clean the balance sheet but the first big step would be to infuse more capital into. And, the second next step would be to tighten the management controls," the market veteran told Business Today.

"This is where probably this bank has to do a lot of work. Till such point this entire exercise gets over, I don't think that it's easy for anyone to buy into banks like IndusInd immediately. I would rather like to see how progressively they're taking corrective steps and measures, including changing the management and then possibly take a call on this particular subject," Choksey added.

IndusInd, in its first earnings report after uncovering accounting discrepancies, posted a consolidated net loss of Rs 2,328.92 crore in the fourth quarter of the financial year 2024-25 (Q4 FY25) as against a net profit of Rs 2,349 crore in the corresponding period last fiscal. Net interest income (NII) came in at Rs 3,048.3 crore for the March 2025 quarter and provisions soared to Rs 2,522.08 crore in Q4 FY25.

Sequentially, the lender's gross non-performing asset (NPA) rose to 3.13 per cent in Q4 FY25 from 2.25 per cent in the December 2024 quarter. 

Sharing a view on defence stocks, Choksey said, "The valuations are expensive. If you make valuations expensive and discount the companies for FY27-28 now when you are in FY25-26, it implies that you are not willing to accept the fact that there is an element of risk involved in their business."

"The Indian market is currently experiencing a slightly euphoric mood, which is leading to some valuation oversights. In my view, many defence companies may look to capitalise on their market capitalisations, possibly through new share placements at higher valuations. However, we should be cautious as these valuations aren't backed by immediate business growth," the market expert also said.