Shares of IndusInd Bank dropped by 2% on Friday as UBS flagged increasing risks of non-performing loans (NPL) in the commercial vehicle (CV) and business loan segments. Early delinquency rates for CV loans surged by 150 basis points (bps) in October 2024 compared to March 2024, with mid-sized private banks and non-banking financial companies (NBFCs) witnessing the most significant impact. Business loans experienced a 70 bps increase during the same timeframe.
UBS also highlighted worsening portfolio quality in its static pool analysis of recent disbursements. Consequently, the firm has revised its credit cost estimates upward by 2–25 bps across lenders, signaling potential headwinds for the banking sector.
Target Price Adjustments for IndusInd Bank: UBS has cut the target price for IndusInd Bank to ₹1,150 from ₹1,350, citing reduced earnings per share (EPS) estimates for FY25/26 by 5–6%. Despite these adjustments, UBS has maintained a “Neutral” rating on the stock.
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