Emkay Global exits IndusInd Bank from its model portfolio, adds PFC

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26 Aug, 2025 12:21

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Emkay Global has removed IndusInd Bank from its model portfolio, citing uncertainty over leadership and the fallout from its derivatives accounting issue. While the brokerage acknowledges that the current valuations may already reflect much of the negativity, it does not anticipate an immediate recovery.

"With banks, we believe it is better to enter at a higher valuation when risks are more compressed and sacrifice some upside rather than go bottom fishing," Emkay Global noted in its report.

As a replacement, the brokerage has added Power Finance Corporation (PFC) to the portfolio, highlighting its attractive valuation at 1x price-to-book value (P/BV). The move also aligns with Emkay's bullish view on the power sector, where it sees strong growth potential.

Emkay Model Portfolio underperformed the BSE 200, declining 0.66% over the week, 3.03% over the month, and 2.05% over three months. Since inception, it is down 12.03%. Financials, Discretionary, and Healthcare were significant drags, with IndusInd Bank and Zomato specifically pulling down returns.

As of 3:00 pm, IndusInd Bank shares were trading at a gain of over 2 percent after slight decline during early trading on Thursday, March 27.

Emkay's portfolio change comes amid a probe by the Securities and Exchange Board of India (SEBI) into potential insider trading among senior officials of IndusInd Bank, as reported by the Economic Times on March 27. The investigation follows significant accounting lapses at the lender, adding further concerns over governance and stability.

The market regulator SEBI is investigating trades executed by five senior officials who allegedly had access to unpublished price-sensitive information (UPSI) at the time of trading. SEBI is also reviewing whether IndusInd violated disclosure norms, adding further scrutiny to the lender's governance practices.

As a part of recent developments on Power Finance, PFC Consulting, a subsidiary of Power Finance Corporation (PFC), has incorporated two special purpose vehicles (SPVs) — NES Dharashiv Transmission and NES Navi Mumbai Transmission. NES Dharashiv Transmission will develop a network expansion scheme in Maharashtra for renewable energy evacuation from Dharashiv, while NES Navi Mumbai Transmission will strengthen the power network to support growing data center demand in Navi Mumbai. Meanwhile, Parminder Chopra, CMD of PFC, has been given additional charge as CMD of REC for three months, effective immediately.