India's IndusInd rebounds on bets bank has come clean on accounting issues
Its stock swung wildly through the day, losing as much as 6% in the morning session to hit an intraday low of 725.8 rupees and then recovering to climb as much as 9.8% to 796.7 rupees, an intraday high. It closed 2% higher.
IndusInd disclosed in March that years of incorrect accounting of internal derivative trades led to a $230 million hit to its accounts. Separately, an internal audit of its microfinance business found that around $80 million was incorrectly recorded as interest over three quarters.
On Wednesday, the lender posted its largest-ever quarterly loss and said it suspected fraud by some employees led to accounting lapses.
The bank's financials reflect full and fair representation of all the concerns brought to its attention, IndusInd Bank's Chairman Sunil Mehta said in a post-earnings conference call on Wednesday.
Six officials of India's IndusInd Bank under investigation for insider trading, sources say
The lender's promoter IndusInd International Holdings was committed to infusing liquidity into the bank if the need arises, chairman Ashok Hinduja said in a statement. Promoter is an Indian market term for large shareholders.
Yes Securities said the latest quarter seemed like IndusInd's 'attempt to come clean.'
Jefferies analysts added that while uncertainty and low profitability will remain concerns for the bank, 'historical trends indicate that current valuations are near lows'.
At least six brokerages downgraded their ratings on the stock after the results and 13 slashed their price targets on concerns over profitability and uncertainty over management succession.
IndusInd's CEO, Sumant Kathpalia, and deputy, Arun Khurana, stepped down last month.
'There is no clarity on new management team, how they gain investor confidence, improve profitability and importantly, whether they will execute better than peers,' HSBC said.
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