Shares of IndusInd Bank rose by over 3% on January 14, trading at ₹973.90 on the BSE, driven by optimism around the expected rebalancing of the MSCI Index in February 2025. The stock has gained 4% over the past two days, bolstered by reports of reduced foreign portfolio investor (FPI) holdings.
Key Highlights:
- FPI Stake Reduction: FPIs reduced their stake to 46.63% in December 2024, from 55.53% in September 2024, increasing foreign headroom to 25%.
- MSCI Index Impact: ICICI Securities estimates that the rebalancing could bring inflows of ₹2,000–₹2,400 crore, further boosting investor sentiment.
Brokerage View:
ICICI Securities noted that the MSCI rebalancing is expected to have a short-term positive impact on IndusInd Bank’s valuation. However, it emphasized the need to monitor the bank’s asset quality trends, particularly in its microfinance institution (MFI) segment.
Recent Performance:
Despite the recent surge, the stock has underperformed over the past six months:
- Down 33%, compared to a 5% decline in the BSE Sensex.
- Hit a 52-week low of ₹927 on December 20, 2024.
Q3 FY25 Financial Performance:
- Deposits: Declined by ~1% QoQ; CASA ratio fell to 34.9% (from 35.9% in Q2 FY25 and 38.5% YoY).
- Advances: Grew by 2.8% QoQ and 12.3% YoY.
- Credit-Deposit Ratio: Rose sharply to 89.6%, from 86.5% in the previous quarter.
Challenges Ahead:
- Deposit Struggles: Decline in CASA and total deposits raises concerns about the bank’s ability to establish a strong deposit franchise.
- Retail Lending Issues: Weak performance in MFI and auto finance segments due to macroeconomic headwinds and adverse demand cycles.