IndusInd Bank has reported discrepancies in its derivative portfolio pertaining to transactions done over the past seven-eight years (FY24 and earlier). The bank's detailed internal review has estimated an impact of 2.35% on its net worth as of Dec'24 (~Rs 15.8 billion).
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Motilal Oswal Report
IndusInd Bank Ltd.'s stock has been on a downward trajectory, facing multiple setbacks, including weakened operating performance and the MD receiving only a one year term versus a three-year regular term proposed by the board.
The recent accounting discrepancies related to derivative transactions have further dampened sentiments and are likely to drive losses in Q4 FY25 as the bank absorbs the impact through its P&L.
We expect the stock to react negatively to this development. However, we believe the board will expedite the process of evaluating both internal and external candidates for a suitable successor, which should help alleviate concerns and improve confidence in the bank's operations.
We are downgrading the stock to Neutral with a revised target price of Rs 925.
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