What should investors do with IndusInd Bank shares? Analysts weigh in

IndusInd Bank share price plummeted 6 per cent on the BSE, hitting a low of ₹725.65 per share, on first-ever quarterly loss in Q4. It, however, recouped losses to trade 3 per cent higher at 10:10 AM

IndusInd Bank share price: Analysts have slapped IndusInd Bank with a string of rating downgrades as they factor-in the impact of the accounting frauds recorded by the bank in the March quarter (Q4) of the previous financial year 2024-25 (FY25).

 

Noting that Q4FY25 was one of the worst quarters for IndusInd Bank, as it reported its first net loss in 19 years, along with the resignation of the entire top management team, amid a spate of accounting derelictions, analysts see a long and uncertain road to revival for the lender.

 

On the bourses, IndusInd Bank share price plummeted 5.8 per cent on the BSE, hitting a low of ₹725.65 per share. It, however, recouped losses to trade 3 per cent higher at 10:10 AM as against the BSE Sensex index's 0.85-per cent decline.  READ STOCK MARKET LATEST UPDATES TODAY LIVE 

 

IndusInd Bank: First net loss since 2006

 

IndusInd Bank posted a net loss of ₹2,329 crore, a first in 19 years, for the quarter ended March 31, 2025.

 

The loss was led by several one-offs such as a mismatch in the derivatives portfolio worth ₹1,960 crore, the reversal of ₹180 crore from interest income and additional provision of ₹1,790 crore for bad loans, and cumulative interest reversal of ₹670 crore and fee income reversal of ₹170 crore pertaining to MFI, among others.

 

Analysts opine that the lapses in internal controls, which were spread across years, highlight the bank’s focus on delivering higher margins and lower slippages to demonstrate its superior business model.

 

In reality, it led to a decline in net interest income (NII) by 43 per cent year-on-year (Y-o-Y) to ₹3,048 crore, and a drag in other income by 72 per cent Y-o-Y to ₹709 crore in Q4FY25.

 

Net interest margin (NIM) contracted 168 basis points (bps) quarter-on-quarter (Q-o-Q) and 201 bps Y-o-Y to 2.28 per cent, and asset quality worsened during the quarter.  ALSO READ | Here's why Nalco share price was buzzing in trade on May 22; details

 

The bank’s loan book declined 6 per cent Q-o-Q due to a sell-off of corporate loans, while deposits were flat Q-o-Q in the March 2025 quarter (Q4-FY25). Analysts see a further risk of run-down in Q1-FY26, given the unfolding of the recent accounting lapses following which there was a spate of top-tier management exits. READ MORE

 

"Given the series and intensity of frauds, the RBI may possibly consider appointing a nominee director on the Board and even push for a public sector banker as the MD. Even in the event of a private banker being onboarded, as the new MD they will be faced with the uphill task of resurrecting the bank and regaining customer/investor trust," said those at Emkay Global Financial Services.

 

The brokerage has retained its ‘Reduce’ rating with a lower share price target of ₹650 from ₹725 per share.

 

"Though the capital (CET 1 at 15.1 per cent) and liquidity (liquidity coverage ratio at 136 per cent) situation is comfortable for now, we trim our net profit estimates by 16-34 per cent over FY26-28, factoring in business disruption and management uncertainty," it said.

 

IndusInd Bank stock downgraded

IIFL Capital has downgraded the stock to ‘Reduce’ with a target price of ₹690 as it cut FY26-27 earnings estimates by 40 per cent. The path to 1-per cent RoA, it said, seems a long-drawn process amid business uncertainty.  ALSO READ | HG Infra shares slump 9%, log worst day in over a month on weak Q4

 

Investec, ICICI Securities, and UBS have assigned ‘Sell’ ratings, Morgan Stanley has downgraded it to ‘Underweight’, and HSBC to ‘Reduce’.

Not all are bearish

Analysts at Macquarie maintained their ‘Outperform’ rating on IndusInd Bank with a target of ₹1,210, valuing the stock at 5x trailing PPOP, which is lower than peers.

 

"Further, on a trailing book, the stock trades at 0.9x FY25 P/B. Clarity around management succession, peak credit costs, sustainable NIMs, and governance are key monitorables," it said.