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Nomura calls IndusInd Bank's mutual fund foray a positive, may pave way for others

While a step forward for IndusInd Bank, Nomura emphasizes that the success of the new AMC subsidiary will depend on the scale it can achieve.

August 20, 2024 / 09:27 IST
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IndusInd Bank
So far this year, the stock of this private sector lender has declined over 15 percent

IndusInd Bank shares gained over a percent to Rs 1,367 apiece on August 20 after the Reserve Bank of India (RBI) approved plan to set up a wholly-owned asset management subsidiary.

Nomura is viewing this as a positive step, marking the bank’s entry into direct para-banking, potentially paving the way for smaller banks to follow suit. However, it adds that one should expect only a modest impact on valuations over the medium term.

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The brokerage maintained a 'Neutral' on IndusInd Bank and kept the target unchanged at Rs 1,580 per share, which reflects a potential upside of over 17 percent from current levels.

The new asset management company (AMC) will handle mutual fund operations and benefit from an equity infusion by the bank. Previously, IndusInd Bank distributed mutual fund products but without significant scale.