Citi has maintained its Sell rating on IndusInd Bank with a target price of ₹765, implying a potential downside of over 10% from the current market price of ₹854.50. The brokerage flagged a sharper-than-expected decline in advances and warned of continued pressure on margins.
In its Q1FY26 update, Citi noted that the bank’s advances contracted by 3.1% quarter-on-quarter and 3.9% year-on-year—both below its estimates. The drag was led by a significant 6.2% QoQ decline in corporate advances, translating to a YoY fall of over 14%. Consumer loans also dipped 0.9% sequentially, though they posted a 4.8% growth on a yearly basis, likely driven by microfinance (MFI) lending.
Deposits fell 3.3% QoQ and were flat YoY. Retail deposits held steady at ₹1.85 trillion, suggesting a sharp reduction in bulk deposits—particularly a certificate of deposit (CD) base of ₹265 billion raised in Q4FY25. The CASA ratio fell 130 basis points QoQ to 31.5%, while the loan-to-deposit ratio (LDR) stood at 85.2%, and average liquidity coverage ratio (LCR) was 141.3%.
Citi cautioned that with the declining share of high-yielding MFI advances and excess liquidity weighing on returns, the bank’s net interest margins (NIMs) are expected to compress further from the revised range of 3.45–3.50%.
Disclaimer: The views expressed above are those of Citi and do not constitute investment advice. This article is for informational purposes only.
