IndusInd Bank's stock plunges 23% after ₹1,530cr portfolio mismatch
11 Mar 2025
IndusInd Bank's shares plunged 23% to ₹694 on Tuesday after discrepancies in its derivative portfolio were found during an internal review.
The review indicated a possible negative impact of around 2.35% on the bank's net worth as of December 2024, amounting to a potential hit of ₹1,530 crore.
The revelation has raised concerns over the financial health and stability of one of India's top private lenders.
Numerous analysts covering the lender have downgraded its rating and lowered their price targets.
IndusInd Bank's net worth projected to decrease
Financial impact
IndusInd Bank's net worth is projected to decrease by ₹1,600 crore to ₹2,000 crore.
The Hinduja-promoted lender plans to absorb this loss in its fourth-quarter earnings or the first quarter of the upcoming fiscal year.
This follows the resolution of accounting discrepancies related to multi-year derivatives transactions.
The bank's market capitalization has also plummeted, now at ₹70,161 crore, with shares trading below several key moving averages.
IndusInd Bank's stock performance and potential CEO transition
Market reaction
Over the past year, IndusInd Bank's stock has plummeted 42.42% and is down 37.24% in the last six months.
Nuvama Institutional Equities has observed that while the board had applied for a three-year term for the CEO, only one year was approved.
This is viewed as a negative move, with Nuvama suggesting that this period will likely be utilized to transition to a new CEO after IndusInd Bank's CFO recently resigned just ahead of its Q3FY25 earnings.
IndusInd Bank's external agency review and assurance
Review process
In light of the discrepancies in its derivative portfolio, IndusInd Bank has engaged a respected external agency to independently review and validate the findings.
However, the bank didn't disclose the nature of these discrepancies.
Despite the setback, IndusInd Bank reassured investors that its profitability and capital adequacy remain strong enough to absorb this "one-time impact."
The final report from the external agency is awaited, which will guide any necessary adjustments in its financial statements.
