Source: LIVEMINT
IndusInd Bank share price: Shares of private sector lender IndusInd Bank rebounded from the day's low to trade higher on Thursday, May 22, despite posting a record quarterly loss during the March quarter (Q4) of the financial year 2024-25 (FY25). However, the outlook for the lender remains weak as several brokerages downgraded IndusInd Bank stock post Q4 results and as it reported fresh fraud.
IndusInd Bank share price crashed nearly 6% in the opening trade today to hit the day's low of ₹725.65 on the BSE. However, the stock erased all losses and traded over 2% higher at ₹788.35 apiece around 9.45 am to emerge as the best performer in the Nifty 50 index.
Despite this, in 2025 so far, IndusInd Bank stock has tumbled 19% and is down 45% for the year.
After markets closed on Wednesday, IndusInd Bank reported a record loss of ₹2,329 crore for the March quarter — its worst financial performance so far. The loss came as the bank’s interim management decided to clean up its books and reveal the full impact of past mistakes in accounting.
A major reason for the poor results was a rise in bad loans, which jumped to ₹5,014 crore. A big chunk of this came from the microfinance business, where ₹1,800 crore worth of loans had been wrongly classified earlier and were now shown as bad loans. There was also some trouble in the two-wheeler loan segment.
During this quarter, the bank revealed several issues: A ₹1,960 crore loss from wrongly reported derivative trades; reversal of ₹674 crore in interest income that had been recorded incorrectly; discovery of a ₹172 crore fraud involving employees misclassifying money as income; correction of ₹595 crore in wrong entries made in the past under "Other Assets" and "Other Liabilities".
The bank is now being overseen by experienced banker Sunil Mehta in a non-executive role. He said that all the problems have been identified and fully disclosed, and assured that the bank is on the path to recovery and stability. The management plans to rebuild trust and improve performance moving forward.
"... the financial impact of all the issues that we have declared has already been undertaken in financial year 2024-25," Mehta said in a post-results conference with analysts, insisting that it starts FY26 with a clean slate.
According to a Reuters report, at least five brokerages have downgraded IndusInd Bank stock since the results, while 10 slashed their price targets, taking the median price target to ₹787.50 from ₹850 last month, as per data compiled by LSEG.
Domestic brokerage IIFL Securities is one such firm to downgrade the lender and cut the IndusInd Bank share price target.
It said following the derivatives accounting loss announcement 2-months ago, IndusInd Bank has announced multiple other frauds. It estimates a total P&L hit of ₹4700 crore (7% of 3Q networth).
"We forecast 12% loan growth in FY26, further NIM contraction due to the repo cuts, slower MFI growth, elevated cost of raising new funds and negative carry due to excess liquidity. With weak fee income and average credit cost of 140bps, this should result in ROA of 68/83 bps and ROE of 6%/7.5% in FY26/FY27E respectively," it said, adding that it is downgrading the stock to 'Reduce' with a revised target price of ₹690.
More to come…
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