Investment in IndusInd Bank stocks a value bet, but tread with caution

The prolonged correction in banking stocks has tempted investors to look at underperformers. IndusInd Bank, despite its massive recovery from its all-time low of Rs 235 a share, is one such candidate thanks to its 65 per cent year-to-date underperformance.

Trading below its book value (0.9x its FY22 estimated earnings), analysts at Nomura, UBS, and CLSA are positive, primarily for its beaten-down valuation.

However, immediate upside may be capped considering the lender’s operational and balance sheet challenges. Two of IndusInd Bank’s critical segments — vehicle and microfinance (MFI) loans — are still in the nascent stages of recovery.

These two