IndusInd Bank share price extended losses for the second straight session after the private lender reported Q2 earnings which came below expectations. IndusInd Bank share price hit a fresh 52-week low of Rs 1,192, losing 3% compared to the previous close of Rs 1,228.95 on BSE. The large cap stock has lost 8.53% in two sessions. On Thursday, the bank was top loser on Sensex and Nifty after announcement of Q2 earnings.
While IndusInd Bank share price fell up to 6.45% to Rs 1,225, the stock fell 5.83% to Rs 1,232 on Nifty.
Subsequently, IndusInd Bank share price closed 6.15% or 80.55 points lower to Rs 1228.95 compared to the previous close of Rs 1309 on Thursday. On Nifty, the stock lost 6.04% or 80 points to Rs 1,299.55.
IndusInd Bank reported a 50% rise in its September-quarter net profit from a year ago due to higher net interest and other income. Net profit for the second quarter stood at Rs 1,383.37 crore, up 50.33%, from Rs 920.25 crore a year ago.
However, net profit fell 3.4% on a quarter-on-quarter basis. According to estimates by eight Bloomberg analysts, the lender was expected to report a profit of Rs 1,416.10 crore.
The bank logged a 32.05% rise in net interest income to Rs 2,909.54 crore in Q2 of current fiscal compared to Rs 2,203.28 crore in the same quarter last year. Other income rose 31.08% to Rs 1,726.66 crore.
Tax expenses fell 34.21% to Rs 478.86 crore on a quarter on quarter on basis. Provisions and contingencies climbed 25% to Rs 737.71 crore in Q2 from Rs 590.27 crore in the corresponding quarter of last fiscal. Asset quality deteriorated in the second quarter.
Gross non-performing assets rose 145.33% to Rs 4,370.20 crore compared to Rs 1,781.36 crore last year. On a quarterly basis, it rose 4.06% from Rs 4,199.66 crore a year ago. Gross non-performing assets as a percentage of advances in the second quarter stood at 2.19%, from 2.15% a quarter ago, and 1.09% a year ago.
Brokerage Anand Rathi in a report said, "Higher accelerated provisioning of Rs 360 crore led to a sequential decline in IndusInd's Q2 earnings. Special mention accounts (SMA) disclosures and the stressed pool suggest no major risk in asset quality. With the weaker economic environment, however, we are building in lower loan growth."
The stock has been on a weak wicket since September 26 amid persistent concerns over exposure to stressed sectors. It has lost 23% since then when it closed at Rs 1,548 on BSE. Reports emerged at the end of September that IndusInd Bank had exposure to Indiabulls Housing Finance which was issued a notice by Delhi High Court (HC) in response to a plea for probe into financial irregularities.
Delhi HC has also sought a response from Centre and the RBI on the plea seeking a probe by a Special Investigation Team (SIT) into the alleged illegalities, siphoning of funds and violations committed by the promoters of Indiabulls Housing Finance Ltd (IBHFL).
Investors continued to press sell button even after the Mumbai-based bank issued a clarification that its exposure to a housing finance company (HFC) was fully collateralised with no overdues.
In Q1 of the current fiscal, the lender reported a 38.3 per cent rise in its standalone net profit at Rs 1,432.50 crore for the June quarter of this fiscal. The bank had posted a net profit of Rs 1,035.72 crore in the corresponding period of the preceding fiscal ended March 2019.
Total income grew to Rs 8,624.62 crore during the June quarter of 2019-20 under review, as against Rs 6,369.75 crore in the same period of 2018-19, IndusInd Bank said.
On the asset front, the lender witnessed an uptick with the gross non-performing assets (NPAs) rising to 2.15 per cent of the gross advances at the end of June 2019, as against 1.15 per cent by end of June 2018.
By Aseem Thapliyal