IndusInd Bank to see gradual recovery, says Dharmesh Kant; cites YES Bank turnaround; shares top RE, defence picks

Dharmesh Kant, Head of Equity Research at Cholamandalam Securities, expects IndusInd Bank Ltd shares to gradually recover from the setback caused by accounting discrepancies, with long-term growth prospects remaining intact. "As far as IndusInd's financial health is concerned, it has lost around two quarters so far. Going forward, with all the ongoing management changes and after assessing the extent of damage to its strategy and what needs to be put in place, the bank is expected to hold on to its growth trajectory until then," the market expert told Business Today on Tuesday.

"We have seen that the numbers in the last quarter also declined, be it advances or deposit growth, and even provisioning was significantly higher. This indicates that there could be some further pain ahead, which may keep the upside in check," Kant also said.

Though he believed IndusInd would stage a rebound. Kant cited the example of YES Bank Ltd, where the damage was far more severe, yet the bank managed to restructure itself.

"As we've seen in the case of YES Bank, the private lender managed to bounce back and restructure itself for better growth. Similarly, we believe IndusInd will also recover, as the damage isn't as severe as it was with YES Bank. After this slight setback, for investors with a two-year horizon, this appears to be the right time to enter IndusInd Bank. That said, be aware there could still be a 5-10 per cent dip depending on upcoming news flow, but it's unlikely to fall beyond that. Once things stabilise, we could see a decent upside. However, at this point, it's difficult to say how soon IndusInd Bank will return to its growth trajectory," he stated.

Meanwhile, the crisis-hit lender's Board has approved the appointment of Rajiv Anand as Managing Director and Chief Executive for a three-year term, effective August 25, 2025, bringing an end to the uncertainty surrounding the CEO position.

Sharing his views on the defence sector, Kant from Cholamandalam said any dip in these counters amid a market correction should be seen as an opportunity, adding that Hindustan Aeronautics Ltd (HAL) and Bharat Electronics Ltd (BEL) remain their top picks.

From the renewable energy (RE) space, the market expert expressed a preference for NTPC Green Energy Ltd and Waaree Energies Ltd.