IndusInd Bank Ltd. share price target

Strategic and Operational Headwinds in Focus

IndusInd Bank reported discrepancies in its derivative portfolio pertaining to transactions done over the past 7-8 years. During the internal review of the trade book in derivative portfolio in October 2024, the bank found some discrepancies.

IndusInd Bank (IIB) has communicated a preliminary one-time hit of ~2.35% of net-worth on its derivative portfolio. We peg the pre-tax hit at ~INR 20bn–21bn.

Discrepancy in derivative portfolio account to adversely impact net worth by 2.35%, indicates weak internal controls

driven by uncertainties relating to earnings quality and future leadership. Woes This discrepancy spanned across a 5-7yr period till 31st Mar'24, however, due to an RBI directive, there are no irregularities w.e.f. 1st Apr'24. While an external review is underway to ascertain the exact impact, internal review suggests a...

The RBI has approved the reappointment of Mr. Sumant Kathpalia as MD & CEO of the bank for a one-year term, effective 24th Mar’25, following the conclusion of his current term.

As opposed to the three-year term requested by IndusInd Bank’s (IIB) board for its incumbent MD & CEO, Mr Sumant Kathpalia, RBI has approved a term renewal for only one year.

IndusInd Bank (IIB) reported weak performance in Q3FY2025 across key metrics on expected lines. Net interest income (NII) at Rs. 5,228 crore (below estimates led by lower NIM and slower credit growth) was down 1% y-o-y/2% q-o-q. NIM fell by 15 bps q-o-q to 3.93%, given lower growth in the unsecured book, repricing of the corporate book, higher slippages, and increased cost of funds (9 bps q-o-q).

Subdued quarter with moderate growth in advances and deposits, MFI book under stress

IndusInd Bank (IIB)’s PAT declined 39% YoY/rose 5% QoQ to ~INR14b (in line), as NII and NIM were broadly in line, while provisions continued to remain high.

IndusInd Bank (IIB) reported a sharp 42% earnings miss in 2Q with PAT/RoA at Rs13.3bn/1%, mainly due to slower credit growth (13% YoY), lower fees and higher LLP.

IndusInd Bank (IIB)’s PAT declined 40% YoY/ 39% QoQ at ~INR13.3b (17% miss adjusted for contingent provision of INR5.25b).

We reiterate a Buy on IndusInd Bank (IIB) with an unchanged PT of Rs. 1,750. Near-term business
outlook remains comfortable except for the elevated slippages in the credit card and microfinance
portfolios that would normalise by FY25.

Miss on operating metrics; Asset quality better than expected