IndusInd Bank down 5%; Analysts cut target on 1-yr extension to Kathpalia

On the bourses, IndusInd Bank shares have tanked about 8 per cent in the last five trading sessions, 15 per cent in the past month and 37 per cent in the past six months

IndusInd Bank share price: Private banking company IndusInd Bank shares were under pressure on the first trading day of the week i.e. Monday, March 10, 2025, as the scrip tanked up to 5.38 per cent to hit a fresh 52-week low of Rs 886.40 per share.   Notably, IndusInd Bank has fallen to its lowest level in over 31 months, reaching its lowest point since July 20, 2022. The stock has dropped 17 per cent in the past month and is down 44 per cent from its 52-week high of Rs 1,576, which was reached on April 8, 2024.

 

However, at 10:06 AM, IndusInd Bank shares were off day’s low, and were trading 3.03 per cent lower at Rs 908.40. In comparison, BSE Sensex was trading 0.38 per cent higher at 74,615.21 level.

 

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The fall in the IndusInd Bank share price came after several brokerages slashed IndusInd’s target price after the Reserve Bank of India (RBI) approved the re-appointment of Sumant Kathpalia as MD & CEO for just a year until March 23, 2026, despite the board of the bank approving his reappointment for a three-year period.

 

Considering this, here’s what top brokerages said about IndusInd Bank:

 

Motilal Oswal

 

The RBI has approved the reappointment of Sumant Kathpalia as MD & CEO of IndusInd Bank for a one-year term, starting March 24, 2025, following the conclusion of his current term. This is the second instance of the MD’s term being shorter than the board's proposed three-year extension, according to analysts at Motilal Oswal.

 

Analysts said the one-year extension heightens leadership uncertainty, fueling speculation of a potential leadership transition. However, this period gives the bank time to stabilise operations, focus on succession planning, and address regulatory concerns in a structured manner.  ALSO READ: Alembic Pharma down 3% on getting USFDA observation for its Vadodara plant

 

Also, IndusInd Bank has reported muted performance in recent quarters, driven by slow loan growth, asset quality stress, and subdued margins, leading to an about 40 per cent correction in the bank's stock price year-to-date for FY25. Speculation surrounding the MD's term extension has further contributed to the stock’s de-rating.

 

Thus, Motilal Oswal analysts have lowered FY26E/FY27E earnings by 9 per cent/10 per cent, projecting a return on assets (RoA) of 1.3 per cent/1.4 per cent for FY26/FY27. 

 

Despite the near-term challenges, analysts believe that current valuations price in most uncertainties, with better prospects as operating performance recovers in FY26. Hence, analysts have maintained ‘Buy’ with a revised target price of Rs 1,100.

 

Emkay

 

The RBI’s approval of a one-year extension for Sumant Kathpalia impedes strategic continuity but provides the board time to identify a replacement, likely an external private banker, analysts at Emkay said. 

 

This short extension signals dissatisfaction with progress on conditions set during the previous term, especially concerning the MFI portfolio and elevated NPAs. A leadership transition could further complicate matters, given ongoing growth and asset quality pressures.

 

Furthermore, the asset quality is expected to remain under stress for the next 1-2 quarters, particularly in the MFI segment. The bank’s focus is likely to be on margin management and strengthening provisions rather than aggressive growth. As a result, Emkay analysts have lowered FY26-27E earnings by 3-4 per cent.

 

The stock is currently trading at 1x FY27E ABV, factoring in slower growth and management uncertainty. Despite leadership transition risks, Emkay retains its ‘Buy’ rating, noting the attractive risk-reward profile, especially once MFI stress subsides. The target price has been revised lower to Rs 1,125 from Rs 1,400.

 

Nuvama

 

Nuvama analysts believe that the RBI’s approval of a one-year extension for MD & CEO Sumant Kathpalia, instead of the board's proposed three-year term, signals negative implications for the bank. This suggests that a leadership transition may occur within the year, with an external CEO likely, in line with recent RBI preferences for such appointments. This also creates additional uncertainty, particularly regarding earnings visibility, which is already weakened by challenges in the MFI cycle.

 

With expectations of a soft Q4FY25E and high uncertainty surrounding top management, Nuvama analysts anticipate that the stock will remain under pressure despite the sharp correction. Additionally, the recent resignation of the CFO adds to the uncertainty.

 

Given the lack of clarity on leadership and ongoing challenges, Nuvama maintains a ‘Hold’ rating with a target price of Rs 1,115 per share.

 

Jefferies

 

According to reports, Jefferies analysts said the shorter CEO extension could potentially trigger a leadership succession, impacting the bank's strategic direction.

 

Historical cases, such as Federal Bank, Kotak Bank, RBL, and Bandhan Bank, show that stocks typically underperform in the short term (by 3-18 per cent) following shorter extensions or unexpected CEO exits. However, stock performance over 3-6 months is more closely tied to business conditions.

 

For IndusInd Bank, improvements in the MFI and auto segments are key to earnings recovery. The stock may remain range-bound in the near term, as it is trading at a valuation of 1x FY26 adjusted PB, which is at a discount compared to historical averages and peers.

 

Thus, Jefferies has reportedly revised its target price to Rs 1,080 from Rs 1,200 but maintains a ‘Buy’ rating, as the bank is expected to deliver healthy RoA (1.2-1.6 per cent over FY25-27E) once MFI stress eases, offering an attractive long-term risk-reward profile.