IndusInd Bank shares jump 2% after CRISIL reaffirms AA+ rating on lender's long-term debt instruments

IndusInd Bank share price

The shares of IndusInd Bank jumped nearly 2 percent on August 25 after CRISIL Ratings reaffirmed its 'AA+' rating on the private lender's long term debt instruments. The rise in the share price comes despite the stock being scheduled to exit the Nifty 50 index as part of the latest rejig.

In a note dated August 23, CRISIL Ratings reaffirmed the 'AA+' rating on the long term debt instruments, while assigning a 'Negative' outlook. It removed its rating on the long-term debt instruments of IndusInd Bank from 'Rating Watch with Negative Implications'.

CRISIL also reaffirmed its 'A1+' rating on the short-term debt instruments of the company.

The ratings agency had placed the long term rating of IndusInd's debt instruments on 'Watch Negative' on May 7, after "the resignation of top two managerial personnel as well as disclosure of a review being conducted on the bank’s microfinance business by an internal audit department to examine few concerns, brought to attention during finalisation of accounts", it said.

The then CEO Sumant Kathpalia and deputy CEO Arun Khurana resigned from their respective roles in April due to discrepancies in the bank's derivatives portfolio. IndusInd Bank had earlier announced that there were certain accounting lapses in the derivative portfolio which could have a negative impact of 2.35 percent of the bank’s net worth, as of December 2024.

Earlier in August, IndusInd Bank announced the appointment of Rajiv Anand as its new Managing Director and Chief Executive Officer. In a press release, the lender announced today that Anand has taken charge at the helm of the company effectively from today.

"The watch resolution takes into account clarity with respect to the appointment of the Managing Director and Chief Executive Officer (CEO) and the expectation of no further negative impact in the financial statements on account of lapses in internal financial controls," CRISIL said.

"The 'Negative' outlook reflects the modest overall profitability of the bank. The return on assets (RoA) is likely to remain modest over the next few quarters amidst asset quality challenges particularly in the micro loan segment on account of industry wide stress. Improvement in the profitability metrics by the end of fiscal 2026 and sustenance of the same will be critical," CRISIL added, while noting that the ratings reflect healthy capitalisation of the bank, with a high core equity ratio and adequate pre-provisioning profitability.

The National Stock Exchange (NSE) on August 22 announced changes to its benchmark Nifty 50 index. As part of the semi-annual reshuffle, IndusInd Bank and Hero MotoCorp will be dropped, while Max Healthcare Institute and InterGlobe Aviation, the parent company of IndiGo, will be added to the benchmark index from September 30 onwards, the exchange said. The NSE reviews the composition of the Nifty 50 twice a year, based on the average free-float market capitalisation of stocks during the six months ending January 31 and July 31. The changes take effect in March and September.

IndusInd Bank in July reported a 68 percent decline in standalone net profit at Rs 684 crore for the first quarter of FY26, hurt by a decline in loans and a rise in provisions for potential bad loans. On a consolidated basis, net profit fell 72 percent year-over-year to Rs 604 crore.

The lender's net interest income fell 14 percent year-on-year to Rs 4,640 crore in Q1FY26. According to Moneycontrol's poll, IndusInd Bank's net interest income (NII) was seen at Rs 4,279 crore in Q1FY26 and profit was pegged at Rs 559 crore in Q1FY26.

IndusInd Bank shares closed at Rs 772 apiece on August 25. The stock has fallen more than 6 percent in the past one month, and over 25 percent in the past six months. It currently has a P/E ratio of 58.70.