Synopsis:
Although net profit dropped 76 percent year over year, IndusInd Bank reported a significant turnaround in profitability in Q1FY26 after suffering a loss in the previous quarter. Because of the high slippages, poorer asset quality, and muted return outlook, analysts are still being cautious.
The shares of one of the largest private sector banks in India is in focus today, after declaring financial results for Q1FY26, where net profits reported a turnaround into profit on a quarterly basis, check it out.
With a market capitalization of Rs. 62,839 crore, the shares of IndusInd Bank Ltd were trading at Rs. 807 up by 0.55 percent from its previous day close of Rs. 802.05 per equity share.
Q1 Update
In June 2025, the IndusInd Bank Ltd generated net interest income is Rs. 4,640 crore, down by 14.20 percent as compared to Rs. 5,408 crore in Q1FY25, and sharp rise by 52 percent compared to Q4FY25 of Rs. 3,048, indicating a moderate improvement in the operational efficiency yearly.
Operating profit was Rs. 2,568 crore in Q1FY26, decreased by 35 percent as compared to Rs. 3,952 crore in Q1FY25 but the company reported a turnaround in profitability on a quarterly basis, recovering from a loss of Rs. 491 crore in Q4FY25.
The Net profit was Rs. 604 crore in Q1FY26, it sharply decreased by 76 percent as compared to Rs. 2,171 crore in Q1FY25 but The company reported a turnaround in profit on a quarterly basis, recovering from a loss of Rs. 2,329 crore in Q4FY25.
The amount of CASA deposits decreased to Rs. 1,25,006 crore, which is 31.48 percent of the total deposits. The Return on Assets (ROA) decreased to 0.45 percent from 1.70 percent a year ago, while the Cost-to-income ratio increased to 62.23 percent from 49.65 percent on yearly basis.
The net interest margin (NIM) reduced to 3.46 percent in Q1FY26 from 4.25 percent in Q1FY25. CASA ratio decreased from 37 percent to 31 percent from year over year. The Gross NPA ratio was 3.64 percent in Q1FY26 as compared to 3.13 percent in Q4FY25, and the Net NPA also stood at 1.12 percent from 0.95 percent quarter over quarter, indicating the company’s credit management system.
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About the Company
Founded in 1994 under the Banking Regulation Act, IndusInd Bank is a publicly traded commercial bank that provides a variety of banking and financial services, including treasury operations, to both corporate and retail customers.
It works in international financial service centers as well as all over India. It is the fifth largest private sector bank, with 42 million customers, 7,211 branches, Rs. 3.33 lakh crore in loans, and Rs. 3.97 lakh crore in deposits.
The bank uses a universal banking model, with a 31 percent CASA ratio, a 60:40 retail-to-wholesale loan mix, and a high level of digital adoption—93 percent of transactions are done online. The three main segments are gems and jewelry (3 percent), microfinance (8 percent), and auto finance (29 percent of loan book).
Analyst outlook
Citi maintained a sell call with a target of Rs. 765, anticipating future weak growth and high credit costs. Treasury gains and NIM might be helpful, but they reduce earnings by 2 percent to 3 percent in FY26–27. Future plans and the appointment of the CEO are important things to keep an eye on.
Morgan Stanley kept its rating at Underweight, with a Rs. 750 target price. Although Q1 net interest income exceeded expectations, fee income was below expectations, and core PPoP (not including IT refund) was 11 percent below expectations.
Credit costs and slippages remained high. Expecting a weak FY26 with a RoA of 0.6 percent, the company reduced FY26–28 earnings by 15–20 percent. RoA will progressively improve to 0.8 percent in FY27 and 1 percent in FY28.
With a target of Rs. 650, Macquarie kept its Underperform rating, indicating that a Return on Assets (RoA) of less than 1 percent is probably the new normal. Due to stronger margins and treasury gains offsetting weak fee income, Q1 profit was as expected.
Nevertheless, high slippages increased credit costs, and a quarter-over-quarter comparison is meaningless because of the Q4 clean-up. In the near future, RoAs are anticipated to remain below 1 percent.
With a target of Rs. 1,000, Bernstein kept its Outperform rating, citing the Q1 results as highlighting persistent problems and indicating the need to reevaluate the bank’s near-term RoA potential in the absence of any obvious signs of immediate improvement.
Written by Akshay Sanghavi
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