IL&FS exposure only a sentiment dampener for IndusInd Bank

Certainty of at least a partial repayment gives hope to investors; concerns partly priced in

IndusInd Bank’s declaration of its exposure to troubled infrastructure group IL&FS, on Wednesday, caught many by surprise. Yet, the bank’s stock, after a gap-down opening in Thursday’s trade, closed the day with gains of over 2 per cent. The reason: most analysts believe the final impact on IndusInd’s financials may not be significant and much of the pain may be priced in.

The bank divulged details of its total Rs 30-billion exposure to the IL&FS group — Rs 20 billion to the holding company and Rs 10 billion towards special purpose vehicles (or associate companies) set up to execute certain