IndusInd Bank shares in focus on mixed Q4 business update, UBS cuts target price

Shares of IndusInd Bank are expected to be in the spotlight on April 7 following the release of its mixed business update for the January–March quarter (Q4FY25).

Over the past month, the stock of this private sector lender has witnessed a sharp decline of over 27 percent, largely due to an ongoing probe into discrepancies related to the bank’s derivatives portfolio. In contrast, the benchmark Nifty 50 index has outperformed, registering a rise of 1.5 percent during the same time.

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During Q4, the bank reported a 1.4 percent year-on-year (YoY) growth in net advances. However, on a sequential basis, net advances fell by 5.2 percent, settling at Rs 3.47 lakh crore. Total deposits, on the other hand, grew by 6.8 percent YoY and edged up 0.4 percent QoQ, reaching Rs 4.11 lakh crore. Despite this, the bank's Current Account Savings Account (CASA) ratio slipped to 32.8 percent, down from 37.9 percent a year earlier and 34.9 percent in the preceding quarter.

The corporate banking division showed signs of stress, with net advances declining 4.9 percent YoY and 15.1 percent QoQ. In contrast, the consumer banking segment posted healthy growth, with net advances increasing 6.3 percent YoY and 3.4 percent sequentially.

Retail deposits and deposits from small business customers stood at Rs 1.85 lakh crore as of March 31, 2025—slightly lower than Rs 1.88 lakh crore reported at the end of the previous quarter.

The bank’s daily average Liquidity Coverage Ratio (LCR) for the quarter stood at 118.4 percent, while the LCR as of March 31, 2025, came in at 136.2 percent.

Brokerage firm UBS maintained its ‘Sell’ rating on IndusInd Bank and reduced its price target on the stock by 22 percent—from Rs 770 to Rs 600.

UBS flagged several factors that could potentially lead to further de-rating of the stock. Major concerns include muted deposit flows, uncertainty surrounding the appointment of a new Chief Executive Officer (CEO), and the impending findings from the external auditor’s report—elements the brokerage views as pivotal to gauging the bank’s future performance.

UBS also revised its forecasts, cutting its loan growth estimate by 200 basis points to 10 percent. It further slashed its Net Interest Margin (NIM) projections by around 20 to 25 basis points for FY26 and FY27. Additionally, the brokerage has trimmed its earnings per share (EPS) estimates by approximately 14 to 15 percent for FY26 and FY27, citing lower margins and increased credit costs.

Meanwhile, Morgan Stanley has taken a more neutral stance, issuing an ‘Equal-Weight’ rating with a target price of Rs 1,105 per share. It described the quarter as weak, highlighting that deposit and loan growth slowed to 7 percent and 1 percent YoY, respectively. The firm noted a significant loss in market share and stated that it is awaiting more clarity on margin trends and asset quality, particularly within the microfinance institution (MFI) segment.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.