Shares of IndusInd Bank Ltd. tumbled 25% in Tuesday’s trading session, marking its biggest single-day fall on record, as the bank continues to face multiple analyst downgrades and reduced price targets. The decline comes after the lender disclosed significant accounting discrepancies related to its forex derivatives portfolio, raising concerns about internal processes and financial stability.
Key Developments
- IndusInd Bank revealed on March 10 that it had noted discrepancies in its derivative portfolio, affecting internal positions taken to hedge forex deposits and borrowings.
- The bank estimated an adverse impact of 2.35% of its net worth due to these issues.
- As a result, the lender will take a ₹15,800 crore post-tax hit in Q4 FY25.
Brokerage Ratings and Downgrades
- Citi: Maintains “buy” but cuts price target to ₹1,160 from ₹1,378. Adjusted FY25 earnings down by 25%.
- Macquarie: Retains “buy” rating with target of ₹1,210, highlighting concerns over leadership stability.
- Emkay Global: Downgrades to “add” from “buy”, slashing target to ₹875.
- Nuvama: Downgrades to “reduce” from “hold”, setting a target of ₹750, citing credibility and earnings concerns.
- DAM Capital: Downgrades to “neutral” from “buy”, reducing target to ₹920 from ₹1,200.
- Motilal Oswal: Cuts rating to “neutral”, lowers target to ₹925 from ₹1,100.
Investor and Market Sentiment
- Out of 51 analysts covering the stock:
- 26 have a “buy” rating.
- 17 have a “hold” rating.
- 8 have a “sell” recommendation.
- IndusInd Bank’s stock is currently trading at ₹674, down 56% from its recent high of ₹1,576.
Concerns Over Leadership & Future Outlook
- The bank’s CEO’s one-year extension, instead of a standard three-year term, has fueled speculation over leadership stability.
- The CFO’s resignation before Q3 results and recent management concerns add to investor worries.
- Analysts believe the bank’s credibility, asset quality, and business model face severe scrutiny, impacting the long-term outlook.
As uncertainty looms over IndusInd Bank’s risk management and leadership continuity, investors remain cautious, with many analysts forecasting further downside risk in the coming quarters.
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