IndusInd Bank Stumbles: First Loss in 20 Years Sends Shares Down

IndusInd Bank Suffers First Net Loss in Nearly Two Decades

Shares of IndusInd Bank took a hit on Thursday, tumbling as much as 5% in early trading after the Mumbai-based private lender reported its first net loss in nearly two decades for the March quarter. This disappointing news has sparked a wave of downgrades and price target cuts from leading brokerages.

Analysts React with Concerns

At least one-third of the 45 analysts covering IndusInd Bank have now issued a “sell” recommendation on the stock. Concerns are swirling about the bank’s lack of strategic direction, sluggish balance sheet growth, and uncertainty surrounding its profit margins.

Here’s a breakdown of what some major brokerages are saying:

• UBS: Downgraded to “sell” with a price target of ₹600, citing the stock’s current valuation and concerns about the bank’s future prospects.
• HSBC: Downgraded to “reduce” and slashed its price target to ₹660, comparing IndusInd Bank’s current situation to the pre-2009 era and expressing uncertainty about its recovery plan. HSBC also significantly reduced its earnings estimates for the bank.
• CLSA: Maintained a “hold” recommendation but lowered its price target to ₹725, citing the need for clarity on the bank’s succession plan and its ability to maintain stable profitability.
• Nuvama: Maintained a “reduce” recommendation and cut its price target to ₹600, expressing concerns about the bank’s future retail deposit growth and the impact of high liquidity needs on its profitability.
• Jefferies: Stick with a “buy” rating but reduced its price target to ₹920, acknowledging that growth and profitability may remain subdued in the short term but seeing potential for a recovery.
• Macquarie: Maintains an “outperform” rating and a ₹1,210 price target, citing the bank’s attractive valuations despite concerns about asset quality.

Looking Ahead

The market is closely watching IndusInd Bank to see how it addresses these challenges. Key factors to monitor include clarity on the bank’s succession plan, the peak of its credit costs, sustainable NIMs, and strengthened corporate governance. The bank’s ability to navigate these issues will be crucial in determining its future performance.

Shares Dip Ahead of Results

Shares of IndusInd Bank closed 2% lower on Wednesday ahead of the results announcement. The stock has declined 3% in the last one month, reflecting investor concerns about the bank’s recent performance.