Banking: IndusInd Bank in trouble after a 27% fall in stock price; Hinduja reassures
Virendra Pandit
New Delhi: The share price of IndusInd Bank plunged 27 percent on the bourses on Tuesday after it reported its net worth was hit by discrepancies in derivative accounts, the media reported.
Experts believe the ongoing slew of negative events, as evidenced by this latest episode, could shake investors’ confidence. However, the bank has reassured its customers and investors about its liquidity.
As the markets opened, shares of IndusInd Bank plummeted sharply by nearly 27 percent after it reported discrepancies in its derivative portfolio which could potentially lead to an adverse impact on its net worth by Rs. 1,530 crores.
IndusInd also dragged bank indices as the Nifty Private Bank index declined 1.38 percent to 23,817.20 and Nifty Bank index dropped 0.75 percent to 47,853.95.
The bank’s stock ended 27.17 percent lower on the BSE at Rs. 655.95, after hitting a low of Rs. 649. On the NSE, it tumbled 27.06 percent to Rs. 656.80.
It experienced a steep fall of over 58 percent from the peak of Rs. 1,576.35 on the NSE.
The bank faced multiple negative events including MFI stress, CFO resignation, the RBI cutting CEO’s term with only one year extension, and the latest earnings impact because of discrepancies in its derivative accounts. Brokerages believe that these events will shake investors’ confidence and have slashed target prices on the stock. However, the stock has plummeted beyond the estimates, continuing downtrend for the fifth consecutive trading session.
The bank’s net worth stood at Rs. 65,102 crores as of December 2024. IndusInd appointed an external agency to independently review and validate the internal findings, according to stock exchange disclosure.
Analysts said the bank could report a loss in Q4FY25 which would hit overall earnings by 25 percent.
However, the bank has tried to reassure the investors and customers.
Addressing investor concerns, IndusInd International Holdings Ltd (IIHL) Chairman Ashok Hinduja said that no margin calls had been triggered on pledged holdings and assured that the promoter group had strong financial backing to expand its stake in the bank once regulatory approvals were secured.
“IIHL is a holding company with over 600 shareholders and no direct business operations. It depends on dividends and the company’s valuation,” he told CNBC-TV18. He emphasised that the group remains financially sound, with sufficient liquidity to replace pledged shares, if necessary.
Responding to concerns over transparency, Hinduja acknowledged investor frustrations about the timing of the disclosure but urged shareholders not to panic, reiterating that there was no need for additional pledging of shares.
