IndusInd Bank up for 5th straight day; gains 41% from March low, here's why

Arun Khurana, deputy CEO of IndusInd Bank, has resigned with immediate effect, taking responsibility for the ₹1,960 crore losses due to incorrect accounting of internal derivative trades.

IndusInd Bank’s share price today: Shares of IndusInd Bank rallied 3 per cent to ₹852.4 on the BSE in Tuesday’s intra-day trade, extending its past four day’s up move on the bourses. In the past one week, the stock price of the private sector lender has rallied 8 per cent, as compared to the 1.3 per cent rise in the BSE Sensex. It has recovered 41 per cent from its previous month low of ₹605.40 touched on March 12, 2025. The stock had hit a 52-week high of ₹1,550 on June 19, 2024.

 

At 09:46 am, IndusInd Bank was trading 1 per cent higher at ₹835.90, as compared to 0.14 per cent rise in the BSE Sensex.

 

Reasons for up move in stock price of IndusInd Bank

 

Arun Khurana, deputy chief executive officer (CEO) of IndusInd Bank, has resigned with immediate effect, taking responsibility for the ₹1,960 crore losses due to incorrect accounting of internal derivative trades, as identified by a Grant Thornton audit. 

 

“Considering the recent unfortunate developments, wherein the Bank determined an adverse accounting impact on P&L, on account of incorrect accounting for internal derivative trades, I having oversight of the Treasury Front office function, as the Whole Time Director, Deputy CEO and a part of Senior Management of the bank, hereby resign, effective immediately,” Arun Khurana said in his resignation letter.

 

This marks the second high-profile exit in 2025, following chief financial officer (CFO) Govind Jain’s resignation in January. Khurana, who had also taken interim CFO responsibilities, joined the bank in November 2021.

 

On Sunday, the private sector lender, IndusInd Bank disclosed to the exchanges that independent professional firm Grant Thornton, which was appointed by its board to find out the root cause behind the discrepancy in the derivative portfolio, among other things, has identified incorrect accounting of internal derivative trades by the bank, resulting in a loss of ₹1,959.98 crore. 

 

IndusInd Bank said, the Bank will appropriately reflect the resultant impact of the accounting discrepancies in the financial statements for FY 2024-25 and take measures to strengthen internal controls accordingly. The Bank has already discontinued internal derivative trades from April 1, 2024.

 

Further, on April 22, IndusInd Bank clarified that the Bank has not engaged EY for a forensic audit as reported in several news items.

 

As a part of the process of finalisation of accounts, the Bank’s Internal Audit Department (IAD) is conducting a review of the Bank’s microfinance institution (MFI) business to examine certain concerns which have been brought to the Bank’s attention. In connection with this exercise, the Bank is engaged with EY to assist the IAD in reviewing certain records of the Bank. The review by the Bank is ongoing, IndusInd Bank said. 

 

Brokerage view – ICICI Securities

 

Rejig in leadership comes in line with anticipation. With limited extension to the Chief Executive Officer (CEO), investors would await clarity on stability in top management.

 

Despite board approval, the Reserve Bank of India (RBI) has provided an extension of 1 year instead of 3 years to the incumbent MD & CEO. This was for the second time when the bank's MD & CEO was allowed sub-optimal extension (i.e less than 3 years).

 

Earnings witnessed a decline owing to higher provision amid elevated slippages in its microfinance portfolio, though the proportion of SMA remained steady at 4 per cent. While management has indicated early signs of improvement with healthy flows in X bucket (excluding Karnataka which is gradually stabilising), sustainability is yet to be proven. Expect continued elevated credit cost in Q4FY25, post which stress could witness a declining trend.   

 

Brokerage view – Mirae Asset Sharekhan

 

Near term uncertainty is likely to prevail as over the past 3 months, the CFO has resigned, the CEO has been given a shorter extension by the RBI, and now we are aware of potential loss in the derivative portfolio. Earnings visibility is also muted for FY26 due to weak MFI cycle and stress in other unsecured retail segments. 

 

Although valuations appear to be cheap at 0.7x FY26E BV estimates, given the uncertainty around management continuity, the regulator may intervene further and earnings visibility is muted for FY26, making building an investment case difficult. Most importantly, building the credibility of the franchise will take time. All these events have dampened sentiments, the brokerage firm said in the March 12, 2025 report.

 

About IndusInd Bank

 

IndusInd Bank is a Hinduja group-promoted newer age private sector lender. The bank has a full product suite with strong moat in vehicle and micro finance business. The bank has a strong presence with a pan-India branch network of 3,063 branches (2,993 ATMs) and a large customer base of ~41 million. The bank is a market leader in most of the product categories in the vehicle finance segment, which forms ~26 per cent of overall loans.