IndusInd Bank Q4 Results Review: IDBI Capital Downgrades To 'Sell' On Loss Reported Led By Discrepancies

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IDBI Capital Report

IndusInd Bank Ltd. reported net loss of Rs 23.3 billion led by interest reversal, lower fee income and higher provisions (due to MFI portfolio). Net interest margins declined to lowest level in last decade to 2.25% led by interest reversal of Rs 6.7 billion, while NIMs would have been 3.5% if adjusted for one-offs.

MFI portfolio de-grew by 5% QoQ along with sequential decline in corporate book resulting in 6% QoQ decline in loan growth.

We have revised down the credit growth to 11% CAGR (FY25-27) vs 15% earlier. Deposit growth slowed further to 7% YoY vs 11% YoY (Q3 FY25). MFI portfolio which remains key concern segment reported rise in GNPA (@13% vs 7% QoQ).

IndusInd Bank has fully utilised the contingent provisions during the quarter.

We have revised downwards the estimates by 42%/30% for FY26/27E respectively. We downgrade to “Sell” rating with a new target price of Rs 680 at P/ABV of 0.75x FY27E (earlier 1.4x FY27E) as management appointments are yet to be finalised by RBI.

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