IndusInd Bank: 5 MFs exited; FPIs, retail investors lapped up shares in Q4

IndusInd Bank Ltd, which was recently in news due to accounting discrepancies in its derivatives portfolio and term extension to its CEO, saw its promoter stake dropping sequentially in the March quarter. Foreign portfolio investors (FPIs) and retail investors increased stakes in the battered stock at the expense of mutual funds (MFs), shareholding data showed.  

Two promoters IndusInd International Holdings and IndusInd Ltd held 11,75,16,010 shares or 15.83 per cent stake in the private bank at the end of March quarter. While the number of shares these two promoters held remained same as compared to the previous quarter, their holding in IndusInd Bank, in percentage terms, fell from 16.29 per cent at the end of December quarter. 

FPI holding jumped 479 basis points to 29.53 per cent at the end of March quarter against 24.74 per cent in the December quarter, as per data compiled with corporate database AceEquity. Retail investors, holding up to Rs 2 lakh shares, together increased their stakes in the bank by 125 basis points to 9.15 per cent in the March quarter against 7.9 per cent in the December quarter.

Mutual fund ownership in the bank fell 276 basis points to 27.55 per cent from 30.31 per cent quarter-on-quarter. There were 33 MFs invested in IndusInd Bank at the end of Q4 against 38 mutual funds in Q3. Kotak Equity Arbitrage Fund owned 1.26 per cent stake in the bank in Q3. It was not among shareholders with over 1 per cent stake in Q4. It is difficult to ascertain whether it was among banks that exited the counter during the month. 

IndusInd Bank shares would be in action today as a report from external agency quantified the negative impact of accounting discrepancies at Rs 1,979 crore as of June 30, 2024. The private bank has assessed an adverse post-tax impact of 2.27 per cent on its net worth as of December 2024, attributable to the identified discrepancies. 

This impact, the bank said, will be appropriately reflected in the financial statements for the financial year 2024–25. IndusInd Bank said it remains committed to strengthening its internal controls and would continue to take necessary measures to enhance the oversight and accuracy of its derivative accounting operations.

To recall, the bank had on March 10 disclosed the identification of certain discrepancies in the account balances within its derivative portfolio. The bank later disclosed about the ongoing review by an external agency, which was independently reviewing the internal findings.

This triggered a downward revisions in brokerage ratings and targets on the counter. A day ago, BNP Paribas suggested a target of Rs 860 on the stock. Morgan Stanley has reportedly suggested a target of Rs 755 on the scrip, Citi Rs 890 and Macquarie Rs 1,210. 

An internal review conducted by the bank estimated a potential adverse impact of approximately 2.35 per cent on its net worth as of December 2024. The bank also communicated that an independent external agency had been engaged to conduct an ongoing review of the internal findings.

The Reserve Bank of India (RBI) later stated that the financial health of the private lender was stable and under continuous monitoring. In an official release dated March 15, the central bank emphasised that there was no cause for concern among depositors in response to speculative reports at this time.