IndusInd Bank stock in focus after SEBI insider trading order; here's why

Shares of IndusInd Bank Ltd are in focus on Thursday morning after a SEBI investigation revealed that top executives at the private lender were aware of major discrepancies in the derivatives portfolio as early as December 2022 — but chose to withheld the information from the public for over 15 months.

According to SEBI’s interim order, the prolonged delay allowed several senior officials to exit their stock positions before the eventual disclosure in March 2025, which caused the bank’s shares to plunge 27 per cent in a single day.

Among those reportedly aware of the issue were CEO Sumant Kathpalia and other key executives, who were actively discussing irregularities in derivative booking and margining months before the news was made public, SEBI suggested.

Despite early internal discussions, the bank only classified the issue as Unpublished Price Sensitive Information (UPSI) on March 4, 2025 — days before the disclosure.

SEBI found that the delay violated regulatory norms and enabled insiders to offload shares, shielding themselves from steep losses. The matter is now the subject of an insider trading investigation.

The delay in classifying and disclosing the information forms the core of SEBI’s case. The regulator has barred five senior executives from accessing the securities market and has frozen profits gained from the alleged insider trades.

SEBI launched a suo motu probe after IndusInd’s stock tumbled 27 per cent on March 10, 2025, following the revelation of accounting discrepancies worth Rs 1,529 crore in its derivatives portfolio. IndusInd Bank shares have recovered some of the lost ground, rising 32.92 per cent from a 52-week low of Rs 605.40 hit on March 12 this year. 

The 32-page SEBI order details how five IndusInd Bank executives sold shares between December 4, 2023, and March 10, 2025 — after discovering the irregularities but before informing the public. CEO Kathpalia offloaded 1.25 lakh shares, avoiding a potential loss of Rs 5.2 crore, while another executive, Khurana, sold over 3.4 lakh shares, sidestepping a Rs 14.30 crore loss.

ICICI Securities has downgraded IndusInd Bank Ltd from ‘Hold’ to ‘Sell’, reducing its target price to Rs 650 from Rs 720 — a 17 per cent cut. The domestic brokerage cited concerns over the bank's uncertain outlook, projecting it will underperform the industry with a modest 8% compound annual growth rate (CAGR) and weak profitability, forecasting a return on assets (RoA) of less than 1% for FY25 to FY27.