After falling for the previous two sessions, shares of IndusInd Bank on Wednesday staged a partial recovery by gaining around 4% after the management assured that the lender’s financials remain healthy.
During the intraday trade, the stock fell to Rs 605. But, it staged a comeback and touched a high of Rs 697.6, reflecting a gain of nearly 15%.
The market capitalisation of the private lender increased by Rs 2,240 crore as its shares closed at Rs 685 on Wednesday (Tuesday’s closing price was Rs 656) on the BSE.
Shares of IndusInd Bank fell by around 30% in the past two trading sessions after it had said on Monday that an internal review of its derivative portfolio revealed discrepancies, which could hit net worth by approximately 2.35% as of December 2024.
“The full year won’t be a loss at all. And I think Q4 will also be in profit… The bank will start seeing great profitability from Q1,” chief executive Sumant Kathpalia told CNBC-TV18 on Tuesday evening. He said the bank would not need any additional capital in the next four quarters.
“We have been very transparent. This is a one-off item, not a recurring one. We should get over it in this quarter. You should see the growth the bank is witnessing and the profitability which the bank is used to,” Kathpalia said.
Promoter of IndusInd Bank Ashok Hinduja said they are ready to inject capital, if needed. “If additional capital is needed, promoters and long-term global investors, who have been with the company for 30 years and never exited, are committed to supporting it,” said Hinduja.
Analysts have downgraded the stock and expect a muted growth, saying that the current crisis has dented the bank’s credibility.
“The time line is discomforting — the CFO resigned just before Q3 earnings, the CEO recently got a one-year extension, instead of three, and now a derivatives-induced dislocation. We believe IIB’s credibility and earnings shall be impacted,” said Nuvama in a report. “Given low visibility on succession and earnings (MFI stress, derivatives and change of guard), we are downgrading the stock to ‘reduce’,” the brokerage said.
The bank has appointed an external agency to independently review its internal findings, and is now awaiting the final report, which will determine the accounting treatment of any impact on its financials.