Jobaaj Stories
IndusInd Bank shares have taken a massive hit, plunging 55% in the past year and 26% in a single day on March 11, reaching a 52-week low of Rs 666.25. The sharp decline follows concerns over derivatives portfolio discrepancies, leadership uncertainty, and weak financial performance.
Key Factors Behind IndusInd Bank’s Stock Decline
Discrepancies in Derivatives Portfolio
- The bank admitted to discrepancies in its derivatives portfolio following an internal review, as directed by the Reserve Bank of India (RBI).
- This could impact its net worth by 2.35%, or an estimated Rs 1,500 crore.
- An external auditor’s report is expected by March-end, which has added to market uncertainty.
Leadership Uncertainty
- CEO Sumant Kathpalia’s tenure was extended for only one year, instead of the usual three years.
- Investors see this as a sign of instability, causing further market jitters.
Weak Q3 Financial Performance
- Net profit dropped 39% year-on-year to Rs 1,402 crore.
- Provisions surged 87% to Rs 1,744 crore, indicating higher loan loss reserves.
- Gross NPAs increased to 2.25% from 1.92% a year ago, reflecting asset quality concerns.
Microfinance Loan Woes
In December 2024, IndusInd put Rs 1,573 crore worth of microfinance loans up for sale, signaling continued stress in its microfinance portfolio.
- RBI’s recent preference for external leadership candidates could also impact future management decisions.
With these concerns, IndusInd Bank's market cap has dropped to Rs 51,028 crore, even below Yes Bank’s Rs 51,326 crore valuation. Investors remain cautious as the bank navigates these challenges.
