JPMorgan has maintained its bearish stance on IndusInd Bank, reiterating an ‘Underweight’ call with a target price of ₹550, implying a 22% downside from current levels. The brokerage has expressed concerns about the bank’s core profitability and asset quality, despite headline earnings appearing in line.
IndusInd Bank reported a 72% YoY drop in net profit for Q1FY26, largely in line with estimates. Net Interest Income (NII) declined ~14% YoY to ₹4,640 crore, better than the expected 22% fall. The bank’s Net Interest Margins (NIMs) improved sharply to 3.46% from 2.25% QoQ, including an 11 bps one-off gain.
JPMorgan, however, highlighted that the entire Q1 profit was propped up by trading income and interest recoveries, masking the underlying weakness in the core business. Fee income fell 35% YoY, while operating expenses rose 8.5%, leading to a miss on core pre-provision operating profit (PPoP).
“Despite 5% YoY average asset growth, headline NII contracted 14%, underscoring weak core momentum,” JPM noted. The brokerage expects PPoP to remain subdued over the next three years, with asset quality continuing to weigh on investor confidence.
