IndusInd Bank shares: Brokerage maintains 'Reduce' call, sees 21% downside potential

Nuvama Institutional Equities said IndusInd Bank Ltd reported a loss of Rs 450 crore in Q2 FY26, compared with a profit after tax (PAT) of Rs 680 crore in the previous quarter and Rs 1,330 crore a year ago. The brokerage attributed the loss to an accelerated write-off in the microfinance (MFI) segment and weak loan growth.

The report highlighted that savings account (SA) balances declined 4 per cent quarter-on-quarter (QoQ) and 8 per cent year-on-year (YoY), while loans fell 2 per cent QoQ and 9 per cent YoY. With falling asset growth, write-offs and a one-off reversal in Q1, the bank's net interest margin (NIM) dropped 14 basis points (bps) QoQ to 3.3 per cent.

Nuvama said it is cutting earnings estimates and reiterated its 'Reduce' rating, maintaining a 12-month target price (TP) of Rs 600, valuing the stock at 0.7x FY26E book value. "We believe RoA is unlikely to reach 1 per cent through FY27E, provisions are likely to remain elevated to reduce NNPL and consolidation in growth would continue in the near term. As such, we see the risk-reward as unfavourable," the brokerage noted.

It added that the new CEO will soon unveil a three-year plan, with a medium-term objective of achieving a 1 per cent return on assets (RoA).

Meanwhile, shares of IndusInd Bank slipped 0.17 per cent to close at Rs 758.35 on Tuesday. The stock market remained shut on Wednesday due to 'Diwali Balipratipada'.

The private lender has been under regulatory scrutiny this year after accounting discrepancies were identified in its derivatives portfolio and microfinance operations, which led to the resignations of former CEO Sumant Kathpalia and Deputy CEO Arun Khurana in April 2025.