The foreign brokerage wrote in its note that the past few days have been turbulent for the bank, starting with a one-year extension for the MD, followed by the disclosure of a ₹1,500 crore net worth hit due to an accounting gap.
This has naturally raised investor concerns about the possibility of further negative developments.
CLSA cautioned that uncertainty may persist over the next two to three quarters, with fears of additional financial issues and questions surrounding management stability.
The brokerage also mentioned that appointing a PSU banker as MD could further dampen investor sentiment.
Additionally, the potential invocation of the promoter’s pledged shares by lenders could add to the uncertainty.
However, CLSA believes that, over time, the bank’s fundamentals will take over.
In the near term, the brokerage said that two key positives — a recovery in the microfinance segment and improved banking system liquidity, which, along with potential rate cuts, could provide some relief to margins.
Citi also has a ‘Buy’ rating on IndusInd Bank, but cut its price target to ₹1,160 from ₹1,378 earlier. It said that the recent developments has led them to cut IndusInd Bank’s earnings estimates for financial year 2025 by 25%.
Shares of IndusInd Bank crashed 27% on March 11, after the Mumbai-based private lender reported some deficiencies in its derivatives accounting transactions prior to April 1, 2025. Internal estimates anticipate a hit of ₹1,577 crore due to this issue.
The fall led to a market capitalisation erosion of close to ₹20,000 crore and the stock also entered the F&O ban.
The bank’s MD & CEO Sumant Kathpalia assured investors that IndusInd Bank will turn in a profit during the March quarter despite this hit and that the issue is a one-off in a recent interaction with CNBC-TV18.
Shares of IndusInd Bank saw a marginal recovery on Wednesday, when the stock saw some short-covering as it was in the F&O ban, which means no new positions can be created in the stock.
The stock settled 4.4% higher on Wednesday at ₹684.7 apiece. The stock is now under Stage 1 of the Short-term ASM framework. The margin rate applicable under this stage is 1.5 times the existing margin, or 40% and is capped at 100%.
