IndusInd Bank share price hit lower circuit of 20% today after the lender said it has seen a withdrawal of 10-11% of its deposits since December quarter.
IndusInd Bank touched an intraday low of Rs 329.25, falling 20% on BSE today.
At an intraday volatility of 16.73%, the stock has traded in a wide range of Rs 82.3 today, with more volume recorded close to low price.
IndusInd Bank stock price is trading lower than 5, 20, 50, 100 and 200-day moving averages. The stock price of the lender has fallen 66% in a month and 76% since the beginning of the year 2020.
Credit Suisse in its report said the management call confirmed deposit outflows. As per the research firm, the lender's management said that they have witnessed a 10-11% outflow of deposits, which is an increase compared to the 2% they indicated 10 days ago.
The management also mentioned that a large part was on account of government deposits and bulk deposits, while the decline in retail deposits has been the lowest among the categories. They have so far managed the deposit outflows through the debt market, using refinancing and foreign currency borrowings, the management told Credit Suisse.
As per the management call, the bank is increasing focus on granularising its deposit base and has also recently increased rated by 25bps on the 1-year deposits.
The management also told the brokerage they haven't seen any deterioration in asset quality yet but mentioned that NPAs in Q4 could be 30-40 bps higher in the unsecured loan segment.
"While valuations are now inexpensive at 0.7x FY22E P/B, we expect the stock to 'underperform' until balance sheet growth resumes," said the brokerage and reduced target price to Rs 411.55 as of 30 March 2020 from Rs 430.
As per Kotak Institutional Equities, there is stress in a few sectors but it is addressable and that granularity of deposits will be a key focus area.
The report further added management said the growth deposits outflow (10-12%) is to be replaced by borrowings and there is leeway in terms of building further liquidity.
The bank further told the brokerage that its deposit base has shrunk by 10-11% post the Yes Bank event, with two state governments' deposits accounting for 2/3rd of total drawdown.
The bank said it expects inflows from mutual funds to restart, as its credit ratings have been re-affirmed. The bank has also seen around 30-40 bps increase in delinquencies in Q4FY20. The lender in its concall further added that its promoter has also applied to the RBI for an increase in stake to approximately 26%.
"We are not changing our rating or fair value but we believe that a re-rating from current levels is contingent on the evolving situation on the liabilities side," said Kotak in its report.