IndusInd Bank shares climb despite Rs 2,329 crore loss in Q4; here's what you should do

Shares of IndusInd Bank Ltd traded higher on Thursday even as the crisis-hit private lender recorded a consolidated net loss of Rs 2,328.92 crore in the January-March 2025 quarter as against a profit of Rs 2,349.08 crore in the corresponding period last fiscal. The stock rose 1.82 per cent at Rs 785.10. At this price, it has corrected 19 per cent on a year-to-date (YTD) basis.

Net interest income (NII) stood 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.

IndusInd, in its first earnings report after uncovering accounting discrepancies, disclosed a potential internal fraud involving Rs 172.58 crore which had been incorrectly recorded as fee income during FY25.

Additionally, the bank noted that a cumulative amount of Rs 670 crore in the microfinance business had been wrongly recorded as interest income during the first nine months of FY25 and was fully reversed as of January 10, 2025. The bank also reported unsubstantiated balances, totalling Rs 595 crore, in its 'other assets' accounts, which were offset against corresponding balances in 'other liabilities' accounts.

A few market experts suggested that one needs to stay away from the private lender at present. Market expert Arun Kejriwal advised investors to stay away from the counter at current levels and focus on other better options, adding that those holding should consider exiting.

"The bank has seen discrepancies and who knows whether there could be more or not. Market participants are urged to focus on other available options in the banking space until the ongoing issues get settled," Kejriwal told Business Today.

Deven Choksey, MD at DRChoksey FinServ Pvt, also recommended not entering the counter immediately. "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 specialist stated.

"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.

Echoing similar views, Sebi-registered independent analyst Mitesh Panchal said it is advisable to avoid IndusInd Bank shares as of now.