Mumbai: IndusInd Bank shares faced a sharp decline, hitting a fresh 52-week low of ₹720.50, following a series of downgrades and target price reductions by leading brokerages. The stock plummeted 20% on Tuesday, raising concerns among investors about the bank’s governance and earnings visibility.
The selloff was triggered by the bank’s disclosure of accounting discrepancies in its forex derivatives portfolio, which could result in a post-tax impact of ₹15.8 billion, equivalent to 2.35% of its net worth. The discrepancies, spanning 5-7 years, were revealed during an internal review and are expected to impact the bank’s financial performance in Q4FY25.
Adding to investor unease, the Reserve Bank of India (RBI) recently granted CEO Sumant Kathpalia only a one-year extension, instead of the three-year term sought by the board. This decision has fueled speculation about the bank’s leadership stability.
Brokerages have responded with caution. Emkay Global downgraded the stock to “Add” from “Buy,” slashing its target price by 22% to ₹875. Nuvama Institutional Equities downgraded it to “Reduce” from “Hold,” with a revised target price of ₹750, citing credibility concerns and low earnings visibility. Motilal Oswal also downgraded the stock to “Neutral,” adjusting its target price to ₹925.
Despite the challenges, some analysts believe the bank’s succession planning and resolution of governance issues could pave the way for recovery. However, the immediate outlook remains uncertain, with the final impact of the discrepancies dependent on the completion of an external audit in Q4FY25.
Investors are advised to exercise caution and closely monitor developments, including the audit findings and the bank’s succession planning, before making investment decisions. The stock’s performance in the coming months will likely hinge on the management’s ability to restore confidence and address governance concerns effectively.
