IndusInd Bank shares rebound 10% from day's low after initial fall

Shares of IndusInd Bank Ltd rebounded nearly 10 per cent from day's low after the initial downtick at opening after its quarterly results. IndusInd Bank stock recovered 9.7 per cent to Rs 796.20 on Thursday, from day's low at Rs 725.65 as it fell nearly 6 per cent in the early trade today.

IndusInd Bank reported a net loss of Rs 2328.92 crore in the fourth quarter of the financial year 2024-25, compared to a net profit of Rs 2,349 crore in Q4FY24. The private lender's net interest income (NII) came in at Rs 3,048.3 crore and provisions soared to Rs 2522.08 crore in Q4FY25. This is the first earnings report by the lender after it uncovered accounting discrepancies.

The gross non-performing asset (NPA) of the bank stood at 3.13 per cent in Q4FY25 as compared to 2.25 per cent in Q3FY25. The bank recently disclosed that Rs 674 crore had been mistakenly booked as interest income across three quarters of FY25. It said the board is in advanced stages regarding the selection process, and will submit the recommendations of CEO names to the RBI by June 30.

IndusInd Bank reported higher-than-expected losses for the March quarter due to accounting discrepancies and a fraud detected over the past few months and higher slippages in the microfinance business. The one-offs in the quarter were higher than previously disclosed, stock analysts said adding. This could impact retail deposits for the private lender, they fear.

"Considering the uncertain outlook on various parameters, we have cut our earnings estimates. We have valued IIB at 0.8x its March 2027E ABV (same as earlier) and have derived our target price of Rs 730 (same as earlier)," said Nirmal Bang Institutional Equities. "Our target multiple is at 47 per cent discount to its past 5-year average multiple of 1.5 times."

The stock will see an overhang in the near to medium term due to slowdown in loan growth; stress in unsecured loan segments; and uncertainty over management transition, Nirmal Bang added, while maintaining a 'hold' rating on the stock.

IndusInd Bank's chairman indicated that the selection process of the new CEO is in an advanced stage and the RBI has asked to submit the proposal by Jun 2025, said InCred Equities. "We trim our target price to Rs 840 as we cut our estimates post fresh accounting lapses. Risk-reward appears balanced at 0.8 times FY27F BV," it said with a hold rating.

PPoP loss thus stood at Rs 490 crore. Management suggested an adjusted PPoP run rate of Rs 3,06o crore after adjusting for all one-offs. Loan book declined sharply by 6 per cent QoQ led by decline in corporate book for liquidity and balance sheet management, said Motilal Oswal, which has a 'neutral' rating on the stock with a target price of Rs 650.