The rough ride for the IndusInd Bank share price continues. After the almost 27% cut on March 11, the stock has opened down another 7%. However it soon recovered some loses and is hovering near the 52-week lows. The stock is now down 31% so far in 2025 and has wiped out close to Rs 80,000-crore in market cap from the January peaks. Investor sentiment is no doubt rattled after the bank reported discrepancies relating to forex derivatives.
ALSO READIndusInd Bank’s Rs 1,580 crore discrepancy: What happened and why it matters What’s the management view?
According to the IndusInd Bank management, the final amount of the discrepancy will be crystallised by March-end or April. However, the bank has mentioned that a reversal of an accumulated amount cannot be routed through the general reserve. This according to brokerages will hit Q4 earnings. Prima-facie the P&L would be hit by Rs 2,100 crore hit (pre-tax). The impact will mainly be in interest expense while the remaining would be adjusted against trading income although an exact split has not been given. As per the bank, this irregularity would not impact the overall growth and business prospects.
The Bank had started reviewing the internal trade book and discrepancies were identified by Sep/Oct’24, post which an external agency was hired for a review.
ALSO READIndusInd Bank plunges 25%, biggest single-day crash; Brokerages slash target price by 30% What are analysts suggesting now?
Most banking analysts have put a Hold or a Sell on the stock. The target price has been revised lower by as much as 30% by some. According to Prabhudas Lilladher, “the Bank’s internal review has estimated an adverse one-time impact of 2.35% of Bank’s net worth as of December 2024 which would suggest a post-tax impact of Rs 1,577 core or pre-tax impact of Rs 2,100 crore. The overall hit on FY25 earnings is seen at 25%. We have not materially cut FY26/27E earnings.”
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