IndusInd Bank shares take U-turn, trade higher despite sharp Q4 loss; should you buy, sell, or hold?

This is first earnings report by the lender after it uncovered major accounting discrepancies and has been under scrutiny due to multiple audits and top-level resignations.

“The financial impact of all the above has been fully taken in the audited financial statements of the bank for the financial year 2024-25. The bank's approach towards financials has been to start FY25-26 on a clean slate without carrying forward any of the past issues,” said Sunil Mehta, the chairman of the bank.

At 9.35 am, shares of the firm were quoting Rs 777..8 on the NSE, higher by one percent, after falling up to four percent in the early session.

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Should you buy, sell, or hold IndusInd Bank shares?

Emkay Global said that Q4 marks one of the worst quarters for IndusInd Bank in terms of both, financial outcome (a staggering loss) and resignation of the entire top management team, amid a spate of accounting (derivative, MFI, other assets/liabilities) derelictions. "We believe these developments could hurt the bank's business and financials in the near-to-medium term."

Therefore, factoring business disruption and management uncertainty, the brokerage trimmed its PAT estimates by 16-34 percent over FY26-28E and retained its 'reduce' call with a cut in target price by 10 percent to Rs 650, down from Rs 725.

The new CEO will have to tighten internal controls, strengthen governance and likely rebalance the asset mix, implying a sharp slowdown in earnings growth for next two years. Every other bank that has gone through accounting discrepancies or prior-period adjustments has taken 3–4 years to achieve a new normal, noted Nuvama Institutional Equities.

"Visibility for FY26E is low because it is unclear what happens to retail deposits after disclosures on repeated discrepancies in FY25. Requirement of maintaining high liquidity would impact NIM," said Nuvama Institutional Equities. The brokerage also maintained its 'reduce' call, with a price target of Rs 600, cut from Rs 750 earlier.

CLSA retained a 'hold' call while cutting the target price to Rs 725 from Rs 780, calling it “a quarter to forget," expecting FY26 to be marked by uncertainty.

HSBC downgraded the stock to 'reduce' from 'buy' while raising the target price to Rs 660 from Rs 770. The brokerage said IndusInd has been effectively pushed back to its pre-2009 state, with no clear path to rebuilding yet. HSBC also cut FY26–27 EPS estimates by 41–43 percent due to management’s one-off adjustments to correct accounting issues.

Morgan Stanley downgraded IndusInd Bank to 'underweight' from 'equal-weight' and slashed its target price to Rs 700 from Rs 755. The brokerage said the bear case is playing out, citing a sharp NII miss and concerns over incorrectly classified MFI slippages.

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