IndusInd Bank Crashes 20%; Brokerages Cut Target Price by Up to 30%
IndusInd Bank crashes sharply as its share price plunged by 20% on March 11, touching a new 52-week low of ₹720.35. The stock hit three consecutive lower circuits before 10 AM on the National Stock Exchange, alarming investors and analysts alike.
IndusInd Bank’s share price plummeted by 20%, hitting a new 52-week low of Rs 720.35 on March 11. This significant drop has raised concerns among investors and analysts alike. The bank’s stock hit three lower circuits in quick succession before 10 am on the National Stock Exchange. The troubles for IndusInd Bank seem far from over, with recent disclosures adding to the woes.
Brokerages Slash Target Price by 30%
Leading brokerage houses have downgraded their ratings on IndusInd Bank and significantly reduced the target price. Nuvama Institutional Equities, for instance, downgraded the stock to “Reduce” from “Hold,” slashing the target price by 32% to Rs 750 per share. This move follows concerns over the bank’s credibility and earnings, compounded by issues related to succession planning, MFI stress, and derivatives.
Internal Derivatives Disclosure Raises Concerns
IndusInd Bank disclosed a negative post-tax impact of 2.35% of net worth arising from a markdown on internal derivative trades. This disclosure has the potential to unnerve investors more than a back-dated NPL disclosure. The bank has hired an external agency to conduct an audit in Q3FY25, adding to the existing challenges of the CFO’s resignation and the CEO’s one-year extension.
Motilal Oswal Downgrades to Neutral
Motilal Oswal downgraded the stock to “Neutral” with a revised target price of Rs 925 per share. The brokerage cited weakened operating performance, the MD’s one-year term extension, and recent accounting discrepancies as reasons for the downgrade. These issues are likely to drive losses in Q4FY25 as the bank absorbs the impact through its P&L.
Macquarie Maintains Outperform Rating
Macquarie has maintained an “Outperform” rating on IndusInd Bank, with a target price of Rs 1,210. However, the brokerage raised questions about the bank’s internal processes and compliance, which could be a factor behind the RBI’s decision to extend the CEO’s tenure for only one year.
Morgan Stanley Sees Fading Visibility
Morgan Stanley noted that visibility on IndusInd Bank is fading, with the CFO’s resignation, the CEO’s shorter tenure extension, and the recent derivative portfolio loss. The brokerage firm has an “Equal Weight” call on the stock, with a target price of Rs 900 per share.
Prabhudas Lilladher Downgrades to Hold
Prabhudas Lilladher downgraded IndusInd Bank to “Hold” from “Buy,” reducing the target price to Rs 1,000 per share. The brokerage estimates a 2.35% hit to equity, with a potential impact on Q4FY25 PAT of Rs 1,580 crore post-tax. This episode likely influenced the RBI’s decision to extend the MD & CEO’s tenure for only one year.