IndusInd Bank Price Target: Morgan Stanley Sees 9% Upside As New Management Drives Optimism
Morgan Stanley raised the IndusInd Bank price target to Rs 785 from Rs 750.
IndusInd Bank Ltd. is projected to end fiscal 2026 with a clean balance sheet and strong coverage ratios under its new management team, according to international investment firm Morgan Stanley.
Analysts upgraded the rating on the stock to 'Equal-weight' from 'Underweight' and raised the price target.
They expect further moderation in loan growth and fees in FY26, which will weigh on core operating performance before accounting for provisions (PPOP), even as net interest margin recovers in the second quarter.
Slippages will be under control as management has indicated its intention to improve coverage. "We have now factored accelerated provisioning and higher credit costs into our estimates," the note said.
"With the new management team in place, we expect IndusInd to exit FY26 with a clean balance sheet and strong coverage ratios. This should help normalize credit cost. NIMs should improve further in FY27 given the favorable asset liability mix in a falling interest rate environment. Coupled with higher loan growth, this could help improve RoA in FY27.
The bank is well placed on CET-1, a key measure of a bank's financial strength.
IndusInd Bank Price Target
Morgan Stanley raised the IndusInd Bank price target to Rs 785 from Rs 750. The new target implies a 9% potential upside for the stock.
Analysts said valuation looks attractive as the stock has fallen over 50% in the last 12 months and now trades at 0.8 times the FY27 book value.
Leadership Changes
Earlier this month, IndusInd Bank announced the appointment of Viral Damania as chief financial officer.
This is the second major appointment under MD & CEO Rajiv Anand who took over the bank's leadership on Aug. 25. Before this, on Sept. 1, the bank appointed Pragati Gondhalekar as head of internal audit.
Damania succeeds Gobind Jain, who quit as CFO of IndusInd Bank in January. Two months after his exit, the bank declared that it had identified accounting issues in its derivatives portfolio. After external investigations and questions raised on the role of management in these accounting issues, it was revealed that the bank's microfinance portfolio also saw significant issues.
Sumant Kathpalia, then MD & CEO of the bank and Arun Khurana, deputy CEO, resigned in April after instances of their alleged involvement came to light. In an investigation conducted by Securities & Exchanges Board of India, it was revealed that Kathpalia and Khurana knew of the accounting issues much before they were revealed to the market.
