IndusInd Bank stock: Why IndusInd Bank stock lost 26% today? What does this mean? 

IndusInd Bank experienced a significant setback as its shares dropped by 26% on Tuesday (October 11, 2025), reaching a 52-week low of Rs 674.55. Following two negative developments, a number of brokerages have downgraded the stock and reduced their price targets on Monday and Tuesday. 

The bank's stock has already decreased by 42% in the last year. Analysts view these developments as raising concerns regarding the bank's internal controls and compliance measures.

On Monday (March 10), in a notable update to the stock exchanges, the bank announced that an internal review of processes related to accounting for certain derivatives uncovered discrepancies amounting to approximately 2.35% of the bank's net worth as of December 31, 2024, equivalent to around ₹1,600 crore. To validate these findings, the bank has engaged an external agency.

Why the fall?

According to analyst Black Swan Money, the IndusInd stock fell due to multiple issues. 

"IndusInd Bank, once a top pick, hit Rs 2,000 in 2018 but fell due to multiple issues. Here’s a brief analysis of what failed, red flags, and lessons.

**What Went Wrong?**  
- **Asset Quality:** Post-2018, NPAs rose with loan restructuring, hit by IL&FS crisis.  

- **Risky Loans:** Big exposure to NBFCs, real estate, and microfinance faced defaults (e.g., DHFL, Yes Bank).  

- **Governance:** Aggressive lending, possible loan evergreening, and mgmt exits (e.g., Sobti, 2020) sparked doubts.  

**Lessons:**  
- **Quality Over Growth:** Fast expansion hides NPA risks.  

- **Doubt Optimism:** Compare mgmt claims vs. peers.
  
- **Key Metrics:** Track NIM, NPAs, ROA; watch provisioning.  

- **Diversify:** Avoid sector-heavy lending in shocks.  

- **Price Drops:** Probe steady declines in strong stocks.

IndusInd’s drop proves even good banks falter with excess," Black Swan Money wrote on social platform X. 

IndusInd backstory

The significant drop in IndusInd Bank stock occurred following the bank's revelation of inconsistencies in its derivatives accounting, leading to anxiety among investors and analysts. This represents the largest decline in IndusInd Bank's stock price since March 2020.

The Reserve Bank of India initially provided a one-year extension to current MD & CEO Sumant Kathpalia, despite the board's approval of a three-year extension. Additionally, the bank disclosed a post-tax hit of approximately Rs 1,500 crore following an internal accounting review on Monday evening. The decline in IndusInd Bank's shares has led to a market capitalisation decrease of nearly Rs 20,000 crore.

This revelation comes at a challenging time for the bank, as it is currently facing the microfinance crisis, an unexpected CFO departure in mid-January—just a week before the Q3 results were due—and the disappointing news of the RBI granting CEO Sumant Kathpalia an extension of tenure for only one year, rather than the requested three years.

What has the bank said?

The bank is currently undergoing a thorough internal examination and has enlisted an external agency to confirm its conclusions. It has given investors assurances that its profitability and capital adequacy are robust enough to withstand the one-time impact. The loss will be reflected in either Q4 FY25 or Q1 FY26.

During media interactions, Ashok Hinduja, the promoter of IndusInd Bank, has confirmed that the financial health of the bank remains strong. He also stated that the bank will receive full support in case any capital requirement arises, following the impact of derivatives which led to a reduction of nearly Rs 18,000 crore in market capitalisation on March 11.

What’s next?

According to experts, discrepancies found in the internal review of the bank are expected to harm its credibility and negatively impact its stock performance significantly. Analysts are cautioning that the stock of IndusInd Bank could face additional de-rating due to concerns surrounding weak internal controls. 

According to analysis from 51 industry experts on IndusInd Bank, 26 analysts recommend buying, 17 recommend holding, and eight recommend selling. 

Emkay Global has adjusted its rating on the bank from 'Buy' to 'Add' and reduced its target price by 22% to Rs 875. Nuvama also downgraded IndusInd Bank from 'Hold' to 'Reduce' and lowered its target price to Rs 750. Motilal Oswal has downgraded IndusInd Bank to 'Neutral' and set a revised target price of Rs 925, down from its previous estimate.

In a statement, analysts at Macquarie, a global financial services company, highlighted that these findings raise concerns about the bank's internal processes. Macquarie further stated that such issues raise doubts about the effectiveness of the bank's internal processes and compliance, and may have contributed to a shorter-than-expected extension of the CEO's tenure.

On the contrary, Jefferies, an American multinational independent investment bank, remarked that the discrepancies indicate a lack of strong internal controls within the bank.

The IndusInd Bank shares decreased by 26% to Rs 656.8 on Tuesday, representing a 56% decline from its most recent peak of Rs 1,576. This drop led to a loss of approximately Rs 20,000 crore in market capitalisation for the company.