Citi has maintained its IndusInd Bank ‘Sell’ rating and a target price of ₹765, citing continued margin pressure, soft fee income, and persistent credit cost challenges.
In Q1FY26, the bank posted net profit of ₹5,806 crore, down 72% YoY but broadly in line with estimates. NII declined ~14% YoY to ₹4,640 crore while NIMs rose to 3.46%, driven by a one-off and treasury income. Citi noted that while core NIMs surprised positively, other operational metrics were underwhelming.
The fee-to-assets ratio declined to 1.2%, while credit costs remained elevated at 2.0%. Though MFI slippages nearly halved, stress in the vehicle finance and broader retail book kept slippages high at 3.0%, resulting in GNPA increases across segments.
“Legacy concerns may have stayed subdued this quarter, but the road to consistent profitability hinges on improving NIM stability, cost control, and fee income growth,” Citi noted, adding that RoA and RoE remain muted.
