IndusInd Bank rebounds 5% from day's low as brokerages hope MFI stress to bottom out

a silver lining in the form of improved early delinquency trends in December

IndusInd Bank shares rebound 5 percent from day's lows to Rs 1,022 per share on February 1 following a disappointing performance in the third quarter of FY25, with weak numbers across key financial metrics. Brokerages remain cautious, anticipating further stress, though some see signs that the worst of the microfinance (MFI) segment slippages may be nearing an end, which could be a positive trigger for the stock.

Bernstein analysts acknowledged the ongoing asset-quality challenges but believe the MFI segment may have passed its lowest point. They expect that any clear indication of stabilisation could drive a stock re-rating. Given the current valuation multiples, Bernstein has assigned an “outperform” rating with a target price of Rs 1,300 per share.

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HSBC has taken a more conservative stance, cutting its FY26-27 earnings estimates for IndusInd Bank by 12-16 percent due to expectations of weaker loan growth. The brokerage foresees more near-term challenges but sees long-term value. It has issued a “buy” call while reducing its target price to Rs 1,150 per share.

Meanwhile, CLSA has also maintained an “outperform” rating, highlighting a silver lining in the form of improved early delinquency trends in December compared to October and November.

However, the firm noted that microfinance slippages increased sequentially, and overall loan growth remained subdued. CLSA has set a target price of Rs 1,300 per share.

For Q3FY25, IndusInd Bank reported a 39 percent year-on-year drop in net profit to Rs 1,402 crore, aligning with Moneycontrol's estimates. Net interest income (NII) declined 1.2 percent year-on-year to Rs 5,228 crore from Rs 5,295 crore.

The bank's asset quality metrics worsened, with gross non-performing assets (GNPA) rising to Rs 8,375 crore (2.25 percent) from Rs 6,279 crore (1.92 percent) a year ago. Net non-performing assets (NNPA) also increased to Rs 2,496 crore (0.68 percent) from Rs 1,864 crore (0.57 percent) in the previous year.