Known for its banking and financial services, the company has faced a challenging quarter with declining profits and rising NPAs. This article explores whether the bank can recover after a 30% decline, analysing financial performance, brokerage views, and key factors influencing investor decisions. Should you buy, sell, or hold?
Share Price Movement
The share price of IndusInd Bank Limited went up 3.2 percent to Rs. 1,023 per share on Saturday, an increase from its previous close of Rs. 991.20 per share. The market capitalisation now stands at approximately Rs. 79,482 crore as of February 01, 2025.
Q3 – Financial Highlights
The company’s profit dropped 39% to Rs. 1,401.3 crore from Rs. 2,297.9 crore. Deposits grew 11% year-on-year, but net interest income (NII) declined 1.2% to Rs. 5,228 crore in Q3FY25 from Rs. 5,296 crore in Q3FY24. Net interest margin (NIM) also fell to 3.93% from 4.29% last year and 4.08% in the previous quarter.
Provisions and contingencies surged 86% to Rs. 1,743.6 crore from Rs. 934.2 crore. Meanwhile, gross NPA increased to 2.25% from 2.11% quarter-on-quarter, and net NPA rose slightly to 0.68% from 0.64%.
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Brokerage Targets
1. Nuvama
Nuvama maintained a ‘Hold’ rating on IndusInd Bank, lowering its target to Rs. 1,115 from Rs. 1,290. The downgrade follows a weak Q3FY25 performance, with net interest income and pre-provision operating profit (PPOP) missing expectations. NIM fell 15 bps due to loan repricing, while slippages in tractor, small CV, and corporate loans increased.
2. CLSA
CLSA reiterated an ‘Outperform’ rating with a target of Rs. 1,300, acknowledging a subdued quarter due to stress in the microfinance sector. While PPOP met expectations, credit costs were 20-25 bps higher. The brokerage remains optimistic about recovery despite near-term headwinds.
3. Bernstein
Bernstein noted that asset quality remains weak but sees signs of bottoming out in the MFI segment. At a 1.1x price-to-book ratio, the stock could benefit from any stabilisation. While risks persist, the worst may be over, offering potential upside.
4. HSBC
HSBC maintained a ‘Buy’ rating but cut its target to Rs. 1,150, citing continued pressure on key metrics and further stress ahead. It lowered FY26-27 EPS estimates by 12-16% due to weaker loan growth. However, with a 1x FY26 estimated book value, the risk-reward remains attractive.
Competitors
IndusInd Bank faces competition from HDFC Bank, ICICI Bank, Axis Bank, Kotak Mahindra Bank, Yes Bank, Bandhan Bank, Federal Bank, and IDFC First Bank, all of which offer diverse financial products and services across retail and corporate banking sectors in India.
IndusInd Bank is currently trading at a P/E of 10.65, which is in line with the industry P/E of 10.88.
Written By Fazal Ul Vahab C H
Disclaimer
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