Last Updated:May 22, 2025, 09:29 IST
IndusInd, India’s fifth-largest private lender by assets, announced in March that it had identified accounting discrepancies in its derivative portfolio.
IndusInd Bank Share Price Today: The irregularity came to light following investigations by an external professional firm and the bank’s Internal Audit Department (IAD).
IndusInd Bank Share Price: IndusInd Bank’s shares are in focus after the private lender suspects a staff involvement in a Rs 172.58 crore accounting discrepancy. Along with its q4 results, IndusInd Bank disclosed in the filing that “the Board is also in the process of taking necessary steps to assess roles and responsibilities and fixing staff accountability as per the extant laws and internal code of conduct, in all the identified irregularities.”
The irregularity came to light following investigations by an external professional firm and the bank’s Internal Audit Department (IAD).
The IAD submitted its report on May 20, 2025, revealing that Rs. 172.58 crores were mistakenly recorded as fee income in the microfinance business over three quarters ending December 31, 2024. This amount was subsequently reversed in Q4 of FY 24-25, according to the bank’s exchange filing.
IndusInd, India’s fifth-largest private lender by assets, announced in March that it had identified accounting discrepancies in its derivative portfolio. These lapses were projected to negatively impact the bank’s net worth by approximately 2.35% as of December 2024.
In response, the bank engaged external agency PwC to evaluate the effect on its balance sheet, identify lapses at different levels, and recommend corrective measures.
What Should Investors Do Now?
The one-offs in the qurater were higher than previously disclosed, stock analysts said adding that this could impact retail deposits.
Considering the uncertain outlook on various parameters, Nirmal Bang has cut our its earnings estimates for the bank by 23.6 per cent for FY26 and 13 per cent for FY27, respectively. This brokerage valued IndusInd Bank at 0.8 time its March 2027E ABV and suggested a target price of Rs 730.
“Our target multiple is at 47 per cent discount to its past 5-year average multiple of 1.5x. In our view, the stock will see an overhang in the near term to medium term due to (1) Slowdown in loan growth (2) Stress in unsecured loan segments and (3) Uncertainty over management transition. We maintain a ‘Hold’ rating on IIB,” Nirmal Bang said.
Nuvama said improper accounting resulted in one-offs in every key segment: NII, fees, opex, credit cost and NPLs.
The management indicated that after one-offs, the operating loss of Rs 500 crore would turn to a pre-provision operating profit (PPOP) of Rs 3,06O crore.
“We could not reconcile the adjusted and reported PPOP and fees based on explanations on the call/disclosures, though NII could be reconciled,” Nuvama said.
This brokerage said IndusInd Bank’s visibility for FY26E is low because it is unclear what happens to retail deposits after disclosures on repeated discrepancies in FY25. Requirement of maintaining high liquidity would impact net interest margin (NIM).
“We slash EPS, and target to Rs 600 from Rs 750 earlier,” it said.
MOFSL suggested a ‘Neutral’ rating on the stock with a target price of Rs 650 against Rs 850 earlier. The appointment of a new CEO and the pace of business recovery will be key near-term monitorable, it said.
HSBC has reportedly slashed its target price on IndusInd Bank to Rs 660 per share, saying there is no clarity on rebuilding process at present. It cut FY26-27 EPS estimates by 41-43 per cent after the management made many one-off adjustments to correct accounting discrepancies.
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