IndusInd Bank Shares Plunge 16%: Q2 Results Spark Downgrades and New Target Prices - Read Now

IndusInd Bank Shares: The scrips of IndusInd Bank Ltd plummeted to unprecedented falls, taking a 16% dump on Friday as the bank unveiled some of the least attractive Q2FY25 sets of earnings when its peers delivered their results. Broking firms have now started reviewing target prices amid rising fears over the bank's financial health due to underperformance in the stock.

The price fell to the levels of Rs 1,073 on the Bombay Stock Exchange, thus making it slump to a ridiculous fall of 31% in the equity from the beginning of the year. According to the softer margins, analysts said, operating performance and an extra provisional buffer led to disappointment.

HDFC Institutional Equities believes IndusInd Bank missed the street estimates mainly due to a high deceleration in growth in high-yielding segments and high operating expenses besides efforts to improve collections. The brokerage cuts FY25/FY26 earnings estimates by 12% and has set an updated target price of Rs 1,245, which translates into a Reduce recommendation.

PhillipCapital also commented, citing that stress in the unsecured loan segment had been a drag on growth as well as on margins for FY25, raising credit cost. Most of the potential stress in MFIs and unsecured loans will be accounted for this fiscal year itself, they add. The earnings guidance has now been reduced for FY25 and FY26 by 17.7% and 6.4%, respectively. PhillipCapital retains a Buy rating with a revised target price of Rs 1,560, from Rs 1,830.

Nirmal Bang has downgraded the rating of IndusInd Bank's stock from Buy to Hold, reducing its target price from Rs 1,653 to Rs 1,443. The firm highlighted several factors, including a slowdown in loan growth, stress in diverse loan segments, and pending RBI approval for CEO Sumanth Kathpalia's tenure extension, as critical concerns.

The overall performance of IndusInd Bank was marked by higher provisioning levels, lower other income, and weak growth in high-yielding loans. While the bank drove term deposits healthily higher, the bank also saw the contraction of net interest margin on account of rising cost levels and slower growth in higher-yielding assets.

The scenario surrounding IndusInd Bank is such that the current one presents reflections of the difficulties associated with private lenders within such an environment of competition, requiring reassessments for growth projections and target prices from financial analysts. When investors react to these developments, updates on further performance from the bank would remain pertinent to the analysis.

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