IndusInd Bank gains 5% as Nomura upgrades the stock to 'Buy' category

Nomura upgrades IndusInd Bank to 'Buy' citing governance reset, RBI comfort and expected leadership change; sees 1.1x FY27 book value, targets ₹1,050

Shares of IndusInd Bank (IIB) rose 5 per cent on Monday after Nomura upgraded the stock to a “Buy” with a target price of ₹1,050. The stock ended the session at ₹851.

 

“The commitment from the board to improve governance, the ongoing search for new leadership, and the clear intent to ‘start FY26F on a clean slate’ are crucial positive signs. Also, the RBI’s recent statements acknowledging IIB’s recovery efforts provide a degree of regulatory comfort. The RBI’s potential approval for the promoter to raise its stake in the bank could allay some investor concerns. We upgrade IIB to Buy and value the bank at 1.1x FY27F book value per share to arrive at our target price,” Nomura said in a note. 

 

Shares of the private sector lender remain over 40 per cent below their record highs, largely due to past accounting lapses.

 

During the March 2025 quarter (Q4FY25), IndusInd Bank took a one-time charge of ₹5,300 crore to address discrepancies from prior periods.

 

“Now, with a new leadership expected to be announced soon, we anticipate the bank will focus on steadying the ship through FY26F. Consequently, we expect loan growth to be soft at 6 per cent year-on-year in FY26F, improving to 10 per cent and 13 per cent in FY27F and FY28F respectively. We expect NIMs to remain muted at 3.4 per cent in FY26F, owing to repo rate cuts and elevated funding costs, before improving to 3.6–3.7 per cent over FY27–28F.

 

“We expect credit costs to decline to 1.6–1.3 per cent over FY26–28F (versus 2.1 per cent in FY25), as stress moderates in the unsecured retail and microfinance institution (MFI) segments. Hence, we forecast a gradual improvement in RoA and RoE to 1 per cent and 9 per cent by FY27F,” Nomura added.