IndusInd Bank share at Rs 600 or Rs 1,000? Why stock is not a 'Buy' despite Q1 beat

IndusInd Bank Ltd achieved profitability in the June quarter and its beat on earnings (amid muted expectations) was largely led by other income and lower opex. Fee income crashed and key metrics including asset quality showed deterioration. A 1 per cent return on asset (ROA) looks elusive in FY26 and analyst targets showed risk-reward is unfavourable for the private lending stock, for now. All eyes are on the appointment of new CEO as the RBI extended the deadline to August 28.

Among a handful brokerages, the worst target on the IndusInd Bank stock is Rs 600 by Nuvama, which called the lender's Q1 as weak due to pressure on growth, uptick in non performing loans (NPLs) and a crash in fee income with a steep fall in every line item. It noted that core pre-provision operating profit (PPOP) plunged 47 per cent YoY and RoA slid to 45 bps from 103 bps in Q3FY25 and 168 bps YoY. 

Data showed IndusInd's core NIM slipped to 3.35 per cent  in Q1 against 3.47 per cent sequentially and 4.25 per cent YoY. While core MFI slippage reduced 48 per cent QoQ, CV slippage rose 13 per cent each QoQ and YoY, and other retail and corporate slippage rose 11 per cent QoQ each.

"We are cutting earnings and reiterate ‘REDUCE’, maintaining the target price of Rs 600/0.7x BV FY26E. With RoA unlikely to get close to 1% through FY27E, we see the risk-reward as unfavourable. Management clarified there is no one-off in fee and that Q1FY26 is the new base," it said.

Macquarie suggested an underperform rating with a target of Rs 650. Citi suggested a 'Sell' but a target of Rs 765. 

MOFSL said IndusInd Bank's other income was hit by lower fee income, but treasury gains and NII led to a slight beat on earnings. 

The advances book declined as the bank strategically reduced its corporate lending. The management expects vehicle finance demand to remain subdued. 

"Deposit growth remained muted as the bank exited bulk and CD funding, though the CD ratio remained comfortable at 84 per cent. The asset quality deteriorated primarily due to MFI, and the management expects it to take six months to stabilise. We slightly raise our earnings estimates by 2.6%/2.3% for FY26/27 as the bank is focusing on containing costs and is adopting a profitability-first approach," MOFSL said. 

This brokerage retained its 'Neutral' with a target price of Rs 830. The appointment of a new CEO and the pace of business recovery are seen as key near-term monitorables.

To recall, the bank had submitted a list of potential CEO candidates to RBI on June 30, 2025, post finalisation of which the bank will look to augment the senior management team and also add two additional whole-time directors to the board.

"We incorporate higher credit costs and lower fee income into our numbers leading to -11 per cent/ +0.7 per cent revision in our FY26/ 27 estimates. We introduce FY28 estimates and roll forward our valuations to Sep'27 leading to a target price of Rs 985 (vs Rs 975 earlier), valuing the standalone bank at Sep'27 P/B of 1.05x. Maintain HOLD," Antique Stock broking said.