IndusInd Bank, after market closing on Monday, informed the exchanges that it has noted discrepancies during its detailed internal process review, which relates to its derivative portfolio or internal positions taken to hedge forex deposits or borrowings.
The lender estimates an adverse impact of 2.35% of its net worth during the first nine months of the current financial year. It plans to take a ₹15,800 crore hit post-tax during the March quarter due to these findings.
Analysts at brokerage firms believe the time line is discomforting—the CFO resigned just before the Q3 earnings, the CEO recently got a one-year extension instead of three and now a derivatives-induced dislocation.
The one-year tenor extension as against three years sought could be possibly due to low confidence in leadership skills by the RBI. The bank’s board will take a call on CEO extension in the near future.
Although global brokerage firm Citi has maintained its “buy” rating on IndusInd Bank, it has 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%.
“Recent developments have raised the risk perception and impacts disclosed borrowings cost too,” the brokerage said.
It also called the developments regarding the succession as a litmus test for IndusInd Bank.
Macquarie also has retained its “buy” rating on IndusInd Bank with a price target of ₹1,210.
Brokerage firm Emkay Global has downgraded IndusInd Bank to “add” from its earlier rating of “buy”, slashing its price target by 22% to ₹875.
This follows the lender hosting an analyst call on March 10 to discuss the impact of huge accounting discrepancies observed in its forex derivatives portfolio, which is expected to have an adverse impact of 2.35% on its net worth as of December 2024 (post tax: ₹1,580 crore). This is based on preliminary findings, and the final impact may vary following completion of the external audit in Q4FY25.
Nuvama believes IndusInd Bank’s credibility and earnings will likely be impacted. The brokerage house has downgraded the bank to “reduce” from its earlier “hold” rating and slashed the price target to ₹750.
Shares of IndusInd Bank Ltd. closed 3.71% lower on Monday at ₹901.95. The stock is down 7% so far in 2025.
