IndusInd Bank Shares Rise 2% Despite 72% YoY Profit Drop In Q1; Should You Invest?
IndusInd Bank share price today: IndusInd Bank reported a 68% slump in standalone net profit
IndusInd Bank Share Price: Shares of IndusInd Bank climbed 2% to an intraday high of Rs 818.60 on the BSE on Tuesday, July 29, even as the private sector lender reported a sharp 72% year-on-year (YoY) decline in consolidated net profit for the first quarter of FY26. The bank posted a net profit of Rs 604 crore in Q1FY26, down from Rs 2,171 crore in the same period last year.
The steep fall in earnings was accompanied by a deterioration in key financial metrics. Net Interest Income (NII) dropped 14% YoY to Rs 4,640 crore, compared to Rs 5,408 crore in Q1FY25. The Net Interest Margin (NIM) also shrank to 3.46%, down from 4.25% a year earlier.
Motilal Oswal maintained a 'Neutral' view on IndusInd Bank with a target price of Rs 830, indicating limited upside potential. The brokerage acknowledged the bank's return to profitability after one-off events but flagged concerns over asset quality, particularly stress in the microfinance segment.
'We slightly raise our earnings estimates by 2.6%/2.3% for FY26/27 as the bank focuses on cost control and a profitability-first approach," the firm noted. It projects Return on Assets (RoA) and Return on Equity (RoE) of 0.7% and 6.4% respectively for FY27. The appointment of a new CEO and pace of recovery will be key factors to watch, it added.
Nuvama retained its 'Reduce' rating with a sharply lower target price of Rs 600, citing a weak core performance. The brokerage said Q1FY26 will serve as a new base for the bank, noting a 47% YoY and 32% QoQ decline in core pre-provision operating profit (PPOP).
'RoA fell to 45 basis points from 103 bps in Q3FY25 and 168 bps YoY. We see the risk-reward as unfavourable," Nuvama stated. It also pointed to declining loan disbursals in the microfinance and corporate segments, a 35% drop in fee income, and overall weakness across revenue lines. Reported gains were supported by trading income, while core performance lagged. NIM dropped to 3.35% from 4.25% YoY.
HDFC Securities maintained its 'Reduce' rating with an unchanged target price of Rs 665. The brokerage flagged challenges such as elevated credit costs, succession overhang, senior management exits, and pressure on the deposit franchise.
Despite a 3% QoQ decline in deposits, the CASA ratio fell to 31.5% as current account balances normalized. HDFC Securities expects muted return ratios and single-digit loan CAGR over the medium term. 'We believe that IndusInd Bank requires a complete overhaul under enhanced regulatory scrutiny to restore stakeholder trust," the firm added.
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