IndusInd Bank shares fall over 6% despite 72% jump in Q1 profit, brokerages divided

IndusInd Bank shares fell over 6 per cent on Thursday despite a 72 per cent jump in consolidated profit after tax to ₹1,037.05 crore for the June quarter, as investors weighed the improvement in earnings against continued pressure on net interest margins and concerns over the pace of return on assets recovery.

Brokerages remained divided on the stock as they turned more cautious.

The stock hit an intraday low of ₹1,000.60 on the NSE, down 6.4 per cent.

IndusInd Bank’s board approved raising up to ₹20,000 crore through debt securities and augmentation of capital through a further issue of up to ₹10,000 crore through equity instruments and/or convertible debt securities

The bank’s management said it aims to align credit growth broadly with industry levels in FY27, while maintaining its FY27 exit return on assets guidance of 1 per cent. It expects the improvement to be driven by better business momentum, lower credit costs and operating leverage. The increasing share of retail deposits is also helping lower the cost of deposits, with further scope for improvement, management said.

The bank expects the transition to expected credit loss accounting to have a 1-1.5 per cent impact on loans. However, management does not expect a material increase in steady-state credit costs.

Jefferies maintained its buy rating and raised the target price to ₹1,250 from ₹1,100, saying the June-quarter results indicate that the bank is on track for improvements. The brokerage highlighted encouraging trends in loan growth, asset quality and core return on assets. It said core operating trends improved, supported by lower operating expenses and credit costs, and expects these improvements to continue over the next two to three years. Jefferies added that visibility on achieving a 1.5 per cent return on assets will be the key catalyst for a re-rating.

Macquarie maintained its underperform rating with a target price of ₹625. It said asset quality improvement remains on track and noted that profit after tax exceeded estimates, aided by lower credit costs. However, it expects net interest margins to remain under pressure and said the bank’s ambition to improve return on assets faces a demanding road.

Kotak Securities downgraded the stock to sell from reduce while raising its target price to ₹850. CLSA also downgraded the stock to underperform from hold, while increasing its target price to ₹925.

Motilal Oswal said IndusInd Bank reported a healthy quarter, supported by healthy operating performance and one-off income. It noted that RoA improved to 0.78 per cent from 0.45 per cent in 4QFY26, although it stood at 0.63 per cent after adjusting for the one-off. The brokerage said NIM expanded 18 basis points q-o-q to 3.57 per cent, while adjusted NIM contracted 4 basis points q-o-q to 3.35 per cent.

Motilal Oswal reiterated its neutral rating and raised its target price to ₹1,125, while raising its earnings estimates by 18-19 per cent for FY27/FY28E.

PL Capital retained its accumulate rating and raised its target price to ₹1,150 from ₹960, citing consistent improvement in the earnings trajectory.