IndusInd Bank shares in focus amid Sebi insider trading probe reports

IndusInd Bank shares are likely to remain under the spotlight during the trading session on Tuesday as the news agency Reuters reported that the markets regulator Sebi is investigating six bank officials for insider trading to determine if they sold stock options while being aware of accounting lapses at the bank before these were publicly disclosed.

The Securities and Exchange Board of India (Sebi) is examining the timing of trades by these six officials to ascertain whether the sales violated regulations and the internal code of conduct of India's fifth-largest lender, said the global news agency citing sources. Investigations are in preliminary stages and show cause notices have not been sent yet, the sources said.

Earlier this month, Reuters also reported that a forensic review by audit and advisory firm Grant Thornton found two bank executives traded in its shares while they were aware of accounting lapses at the bank but before those were made public. Sebi sought a copy of the report from the bank.

IndusInd bank Ltd had disclosed in March that years of incorrect accounting of internal derivative trades had led to a $230 million hole in its $60.8 billion balance sheet. Earlier this month, IndusInd Bank's MD and CEO Sumant Kathpalia resigned from his position a day after deputy CEO Arun Khurana's resignation.

IndusInd Bank released a fresh notification with Rs 670 crore of cumulative interest (three quarters) has been incorrectly accrued, which was reversed in 4QFY25 and set-off balances of Rs 600 crore on the balance sheet, said Kotak Institutional Equities, citing them as operational risks.

These disclosures make it harder to build any convincing investment argument at this stage, it said with a 'reduce' rating and a revised target price of Rs 800 (from Rs 850 earlier). "We have revised our earnings downward to reflect the fresh disclosures and build higher provisions," it said.

IndusInd Bank, the troubled private lender, which is already under scrutiny due to multiple audits and top-level resignations, is set to report its earnings for the quarter and financial year ended on March 31, 2025. The lender expected to post a weak financial performance for the March quarter (Q4FY25), weighed down by recently uncovered accounting discrepancies.

Shares of IndusInd Bank settled at Rs 784.05 on Monday, rising marginally. The total market capitalization of the lender stood little more than 61,000 crore. The stock has gained nearly 30 per cent from its 52-week low at Rs 605.40, hit in March 2025.

ICICI Securities has cut its rating on IndusInd Bank Ltd to 'Sell' from 'Hold' earlier, slashing its target price on the banking stock to Rs 650 from Rs 720 earlier, a drop of 17 per cent. The domestic brokerage said IndusInd Bank is in uncharted waters and should see a subpar industry growth of 8 per cent CAGR) and profitability  -- with less than 1 per cent return on asset (RoA) for FY25–27.