Reduce IndusInd Bank; target of Rs 850: ICICI Securities

ICICI Securities research report on IndusInd Bank

As opposed to the three-year term requested by IndusInd Bank’s (IIB) board for its incumbent MD & CEO, Mr Sumant Kathpalia, RBI has approved a term renewal for only one year. This is the second consecutive instance, when Mr Kathpalia has been denied full term by RBI. We believe this may lead to deliberation on how the regulator could be construing individual capability/suitability or governance of the institution, or both. We believe the board could begin considering an MD & CEO succession plan, which may include external candidates as well. We see heightened uncertainty in the near term on possible kitchen sinking, and probable names of MD&CEO candidate.

Outlook

We downgrade IIB to REDUCE (from Buy) with a revised TP of INR 850 (INR 1,350), valuing the stock at ~0.9x FY26E ABV. Risks: Better-than-expected growth; and seamless management transition.

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