Citi has a Sell call on IndusInd Bank with a target price of ₹765, citing persistent asset quality concerns and muted profitability outlook under new leadership. While the bank has appointed a new CEO and CFO, the brokerage highlighted that filling executive director positions remains a key pending task.
Forward flows, particularly in the microfinance segment, are expected to keep slippages elevated, with some stabilisation likely only in the second half of the fiscal year. Citi added that credit costs will hinge on the timing of accelerated write-offs. Demand weakness in vehicle finance and the run-down of the MFI portfolio are expected to weigh on growth, though these pressures may be partly offset by strength in other retail lending and a resumption in corporate credit.
The brokerage said rebuilding fee income, which reset to a low base in the first quarter, is critical for the bank’s earnings trajectory. On costs, IndusInd is working to contain operating expenses, with the management targeting lower growth in the second half of the year compared with the first.
Citi has reset its return ratios lower, projecting return on assets at 0.5% and return on equity at 4%. It stressed that execution and strategic clarity under the new leadership team will be vital for the bank to regain investor confidence.
Disclaimer: The views and recommendations made in this article are those of Citi. This article does not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
