IndusInd Bank's stock dropped by 16% in Friday’s trading after it reported weaker-than-expected results for the September quarter, marking the lowest performance among banks so far. The bank’s earnings for Q2FY25 fell short of market predictions due to lower profit margins, weak operational performance, and extra provisions for possible future risks. This news pushed the stock price down to Rs 1,073 on the BSE, adding to a 31% decline in its value this year.
HDFC Institutional Equities commented that slower growth in high-yield loan segments, high operational costs, and elevated credit costs could keep IndusInd’s earnings low. HDFC cut its earnings estimates for FY25/FY26 by 12% and kept a “Reduce” rating, setting a revised target price of Rs 1,245.
PhillipCapital pointed out that stress in unsecured loans has slowed growth and hurt margins, leading to increased credit costs. While they anticipate that much of this stress will be accounted for in the current fiscal year, they lowered their earnings estimates for FY25/26 by 17.7% and 6.4%, respectively. They expect a 7% decline in earnings for FY25, followed by a 27% growth in FY26, with returns on equity of 12.5% and 14.3%. PhillipCapital maintained a “Buy” rating but cut the target price to Rs 1,560 from Rs 1,830.
Nirmal Bang downgraded the stock from “Buy” to “Hold,” reducing its target price from Rs 1,653 to Rs 1,443. They noted that the stock might face short-term pressure due to slower loan growth, stress in some loan segments, and the pending RBI decision on CEO Sumanth Kathpalia’s term renewal.
MOFSL (Motilal Oswal Financial Services) also reported that the results showed higher provisions, lower income from other sources, and slower growth in high-yield loans. While deposits grew due to term deposits, net interest margin (NIM) contracted due to rising costs and slower growth in higher-yielding assets. MOFSL cut its earnings estimates by 16.7% and 8.7% for FY25 and FY26, maintained a “Buy” rating, and set a target price of Rs 1,500.
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