IndusInd Bank share: 'PSU-like' valuations! 5 reasons why the stock is in news today

IndusInd Bank Ltd shares were trading higher in Wednesday's trade after the fresh management commentary and the raising of Rs 11,000 crore funds by the private lender via certificates of deposit (CDs). While the stock is trading at 'PSU-like' valuations, stock analysts believe it would be prudent for investors to stick with larger banks, as it is unknown if this is an IndusInd-specific issue or part of a broader banking sector concern. Trying to catch the bottom in IndusInd Bank at this stage may not be the wisest move, said one analyst.

A few others are cautious, but their target prices suggest upside potential for IndusInd Bank stock.

IndusInd Bank shares rose 1.45 per cent to hit a high of Rs 691.60. The stock is in news after Ashok Hinduja, chairman of IndusInd International Holdings Ltd (IIHL), said the external auditor report on accounting discrepancies within IndusInd Bank should be out by next week. He reiterated that if necessary, the IndusInd Bank promoters are willing to inject capital into IndusInd Bank.

Hinduja said he sees this as an opportune moment for the promoters to bolster IndusInd Bank's capital base, especially in wake of the recent slump in the bank's stock price due to reporting of the accounting discrepancies in the derivative portfolio last week. Bernstein has retained its 'Outperform' on the stock, but with a lower target price of Rs 1,000. It said the high reliance on wholesale deposits puts the bank at risk of a sharp deposit outflows, based on fears of deeper accounting issues.

Reuters reported that the private lender has raised Rs 11,000 crore via CDs in a bid to shore up funding position amid deposit withdrawals. IHL, the promoter entity of IndusInd Bank, held 15 per cent stake in the bank, as of December 31, 2024. A total of 50 per cent of its shares are pledged. It has already received initial approval from the Reserve Bank of India (RBI) to raise its stake in the bank from 15 per cent to 26 per cent. However, it is still awaiting final approval from the regulator.

Besides this, Hinduja announced that the acquisition of debt-ridden Reliance Capital (RCAP) has been successfully completed. The bid amount has been transferred to lenders, with the management transfer expected to occur on Wednesday.

What's next for IndusInd Bank?
Krishna Appala, Senior Analyst at Capitalmind Research said the key question is whether this is a one-off event or the start of something bigger — which no one can say for certain yet.

"Long-term investors should closely track both fundamentals and technicals. Yes, valuations look attractive—the stock is trading at 0.9 times book value, 7 times EPS, and at PSU-like valuations despite being a private bank. But here’s the catch: In financials, perception drives price. These kinds of concerns take time to settle, and there is no rush to buy this stock as a long-term bet. For existing long-term investors, avoid averaging down just to reduce your cost price," Appala said.

Kotak Institutional Equities recently cut its target price on the stock to Rs 850 from Rs 1,400 earlier, while downgrading the stock to 'Reduce' from Buy'. MOFSL gave a revised target price of Rs 925. ICICI Securities suggested a target price of Rs 850. Nuvama sees the stock at Rs 750 while Nirmal Bang pegs the stock at Rs 900. PL Capital sees the stock at Rs 1,000. These target prices suggest potential upside.