IndusInd Bank Stock Hammered 30% In Last Six Months: What's Spooking Investors

IndusInd Bank Ltd. has left investors wary with the way its stock has performed in recent period. In the last six months, the private lender's shares have plunged by 30%, even as the Nifty Bank index rose by 3%.The hammering of the IndusInd Bank's stock at the bourses draws focus on the lender's challenges. Here's a look at the factors that could be spooking the investors..IndusInd Bank is facing a moderation in its year-on-year loan growth. In the quarter ended September, it stood at 13%, down from 15% in the preceding April-June period.The decline in loan growth was sharper as compared to the year-ago period. In the September quarter of fiscal 2024, the loan growth stood at 22%.The bank has been watchful of developments in the unsecured products, which reflected in the consistent slowdown in its loan growth in the last few quarters..IndusInd Bank's current account and saving account growth has been moderating as well, in the backdrop of the slowdown in loan growth and tepid deposit growth. In the July-September period, the CASA growth stood at 36% as compared to 40% in the year-ago quarter..Not only IndusInd Bank, but the banking sector as a whole is facing a decline in NIM. This decline reflects the narrowing spread between the interest earned and interest paid. IndusInd Bank's NIM dropped to 4.08% in the three-month period ended September 2024, from 4.29% in the year-ago quarter..IndusInd Bank Q2 Results Review - Multiple Stress Led To Earnings Miss: DRChoksey.In addition, the higher credit costs of the lender is adversely impacting its return on assets. In the first half of fiscal 2025, the credit costs outside the incremental contingent buffer was at 131 basis points, close to their stated aspiration of 110 to 130 bps..IndusInd Bank is witnessing a deterioration in its asset quality due to stress in the microfinance and commercial vehicle businesses. The lender's net slippages increased by Rs 222 crore sequentially, largely due to the microfinance business, in the September quarter. Notably, the first half of the fiscal is seasonally weak in terms of disbursements and asset quality for vehicle business. The second half of the financial year typically contributes a larger share of disbursements as well as recoveries.The bank is expecting to see improvement in terms of disbursement acceleration and asset quality during the remainder of the fiscal. .In the microfinance lending segment, the 30-90 days past due or DPD book increased by 2.1 percentage points during the second quarter, given the sectoral stress. Gross and net slippages in the microfinance business were at Rs 398 crores and Rs 355 crores for the quarter, respectively. This implied a net slippage ratio of 0.96% during the July-September period..IndusInd Bank's provisions nearly doubled to Rs 1,820 crore in the September 2024 quarter from Rs 991 crore in the year-ago period period. This led to the 39.5% year-on-year decline in the second quarter net profit to Rs 1,331 crore. .Following the weak quarterly performance, brokerages slashed target price for the bank's stock and downgraded it..IndusInd Bank Stake Sale: Societe Generale Offloads Shares Worth Rs 421 Crore

IndusInd Bank Stock Hammered 30% In Last Six Months: What's Spooking Investors

IndusInd Bank's muted second quarter result has contributed to its underperformance at the stock market.

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