What does CLSA's downgrade mean for IndusInd Bank's future?

ET BureauLast Updated: May 17, 2025, 07:40:00 AM IST

Synopsis

The brokerage said it cut its FY25 Profit after Tax (PAT) estimates by 22% due to this ₹6.74 billion reversal. It also slashed the FY26 and FY27 PAT estimates by 13%-17%, citing Net Interest Margin (NIM) compression and lower growth.

Mumbai: CLSA downgraded its rating on IndusInd Bank to hold and cuts its target price to ₹780 from ₹900 after the audit report, released last week, highlighted that ₹6.74 billion was incorrectly recorded as interest income in the first nine months of FY25. The stock rose 0.8% to close at ₹782 on Friday

The brokerage said it cut its FY25 Profit after Tax (PAT) estimates by 22% due to this ₹6.74 billion reversal. It also slashed the FY26 and FY27 PAT estimates by 13%-17%, citing Net Interest Margin (NIM) compression and lower growth. "The past 2-3 months have been tumultuous for IIB with the FX derivatives loss disclosure, followed by the resignations of the erstwhile MD and CEO," said CLSA in its note. "The bank is being run by a two-member 'committee of executives' now, and there is no clarity or visibility on the appointment of a new CEO."

Route One Fund Sells Shares
US-based Route One Fund sold IndusInd Bank shares worth Rs 385.75 crore in a bulk deal on the NSE on Friday, amounting to 0.65% of the total stake. Shares of IndusInd Bank ended 0.5% higher at Rs 784.7.

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