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IndusInd Bank reported a 40% YoY decline in PAT to ~INR13.3b, missing estimates due to a contingent provision of INR5.25b. NII grew 5% YoY to INR53.5b, while other income fell 10.5% QoQ. The bank's loan book expanded 13% YoY, but fresh slippages rose 17% QoQ, impacting asset quality. Motilal Oswal has cut earnings estimates for FY25/26 by 16.7%/8.7%, projecting an RoA/RoE of 1.6%/13.6% by FY26, and maintains a BUY rating with a target price of INR1,500, contingent on asset quality improvements and regulatory approvals.
IndusInd Bank, Dixon Tech, and Godrej Consumer were among the top gainers and losers in trading on October 25, as the Sensex and Nifty closed lower due to heavy foreign institutional selling and disappointing Q2 earnings. IndusInd Bank's shares fell over 18% after reporting a 40% year-on-year drop in net profit to ₹1,331 crore, attributed to a significant increase in loan loss provisions. All but the Nifty FMCG sector saw declines, reflecting a challenging market environment.
The Sensex and Nifty fell for the fifth consecutive session, driven by heavy foreign institutional selling and disappointing Q2 earnings, particularly from IndusInd Bank, which saw a 40% drop in net profit. Most sectors, including banking, auto, and realty, declined by 2-3%, with the indices down 8% from their all-time highs. At the close, the Sensex was down 490 points at 79,575, while the Nifty fell 188 points to 24,211.
Emkay Global Financial has maintained a "BUY" rating on IndusInd Bank, setting a target price of Rs 1,650, down from Rs 1,800. The bank reported a 42% earnings miss in Q2, attributed to slower credit growth, lower fees, and increased loan loss provisions, with a projected improvement in return on assets to 1.8% by FY27. Despite cutting earnings estimates for FY25-27, the bank anticipates better margins and asset quality relief in the coming quarters.
Bank stocks are facing pressure as lenders report stress in their MFI portfolios and declining asset quality. IndusInd Bank revealed a surprising 39% year-on-year drop in net profit for Q2, attributed to higher provisions and shrinking margins. Following this disappointing performance, brokerages have reduced their target prices, with Nuvama Institutional Equities lowering it to Rs 1,290 and downgrading the stock to 'hold' from 'buy.'
The Sensex and Nifty fell by 1% amid persistent FII outflows and disappointing earnings, marking the fifth consecutive session of declines. The broader market suffered significantly, with the BSE Midcap and Smallcap indices down 2% and nearly 3%, respectively, while India VIX rose over 7%. IndusInd Bank's shares plummeted nearly 20% following poor quarterly results, contrasting with Godrej Consumer Products, which saw a 2% rise after positive brokerage calls.
IndusInd Bank has fallen out of the top 10 most valuable lenders in India after reporting a weak quarter characterized by increased provisions, declining other income, and slower growth in higher-yielding loans. The bank's stock plummeted 18% to a one-year low of Rs 1,065, resulting in a market capitalization drop to Rs 81,000 crore, placing it in 12th position. Meanwhile, HDFC Bank remains the most valuable lender with a market cap of Rs 13.25 lakh crore, followed by ICICI Bank and State Bank of India.
IndusInd Bank's shares plummeted 15% following disappointing Q2 results, with a 39.5% year-on-year drop in consolidated net profit to Rs 1,331 crore. Despite a 5% growth in net interest income to Rs 5,347 crore, the bank's net interest margin fell to 4.08%, prompting brokerages like Motilal Oswal and HSBC to maintain 'buy' ratings but adjust target prices to Rs 1,500 and Rs 1,510, respectively.
ITC reported a 3% year-on-year increase in Q2 profit to ₹5,078 crore, although its operating margin fell short of estimates. In contrast, IndusInd Bank experienced a significant 39.2% decline in Q2 profit, dropping to ₹1,325.5 crore from ₹2,181.5 crore.
The Nifty 50 and Sensex have both slipped into negative territory, declining 1.8% and 1.4% this week, marking their fourth consecutive weekly loss. IndusInd Bank's shares plummeted 15% following a 40% drop in Q2FY25 net profit, while ITC's shares rose over 4% due to strong performance in cigarette volumes and hotels. Market sentiment remains cautious, with expectations of further declines amid ongoing foreign outflows.
IndusInd Bank Limited
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