IndusInd Bank shares fall 5% from day’s high; here’s why

Shares of IndusInd Bank tumbled as much as 5% in intraday trade on Wednesday as weakness in the broader market dented investors’ sentiment. In comparison, the BSE Sensex and banking index, BSE Bankex, declined up to 1% during the session.

IndusInd Bank share price opened higher at ₹1,258.55, against the previous closing price of ₹1,240.75 on the BSE. In the opening trade, the private lender gained as much as 2.6% to ₹1,273.20, but soon lost momentum and declined 5.25% from the day’s high to touch a low of ₹1,206.25. The market capitalisation of the bank slipped to ₹94,670 crore, with 1.7 lakh shares changing hands over the counter as compared to the two-week average volume of 1.57 lakh stocks.

The stock price of IndusInd Bank trades near its 52-week high of ₹1,275.25 touched on September 20, 2022, while it hit a 52-week low of ₹763.75 on June 23, 2022. The counter climbed 35% in a year, while it has risen 47% in the past six months. In the last one month, the stock added 2%, whereas it rose 1% in a week.

Shares of IndusInd Bank witnessed volatility even after some global brokerages gave an optimistic outlook on the stock following robust business updates for the December quarter of the current fiscal. The bank has reported a 19% year-on-year (YoY) rise in net advances at ₹2.72 lakh crore in Q3 FY23, while deposits increased 14% to ₹3.25 lakh crore as compared to the same period last year. On a sequential basis, advances and deposits grew 5% and 3%, respectively. CASA ratio stood at 42% compared with 42.2% in Q2 FY22, and 42.4% in Q2 FY23.

“Retail deposits and deposits from small business customers amounted to ₹1,37,968 crores as of 31 December 2022 as compared to ₹1,29,990 crores as of 30 September 2022,” the bank said in the BSE filing on Tuesday.

Following the Q3 business update, global brokerage CLSA revised IndusInd Bank to “buy” from “outperform” and raised the target to ₹1,500 per share, a potential upside of over 21% from the current market price.

Jefferies has also given a buy call on the stock with a price target of ₹1,600 per share, saying that valuations of the bank are attractive at the current level.

Morgan Stanley has assigned an overweight rating on the stock with a target price of ₹1,475 per share, citing strong credit demand during the December quarter.

For the second quarter ended September 30, 2022, IndusInd Bank reported 15% growth in net profit at ₹1,805 crore as against ₹1,147 crore in the same period last year. The bank’s net income surged 9% to ₹10,719.20 crore, compared to ₹9,791 crore in the year-ago period. The net interest income advanced 18% to ₹4,302 crore on a year-on-year (YoY) basis, compared to ₹3,658 crore in the same period last year. On the asset quality front, gross non-performing assets (NPA) declined to 2.11% from 2.77% on a YoY basis, whereas its net NPA ratios improved to 0.61% from 0.80% YoY.