IndusInd Bank Share Price Jumps 4% After External Audit Finds Rs 1,979 Crore Impact For FY25 Book; What's Next

IndusInd Bank Share Price: India's leading private sector lender, IndusInd Bank share price skyrocketed by more than 4% on Wednesday, emerging as the top gainer of Sensex and Nifty. The overall market was red, but investors showed bullish sentiment in IndusInd. The reason is that IndusInd found discrepancies in its derivatives portfolio, after an independent external audit. IndusInd Bank is likely to submit the list of CEO candidates to RBI soon!

IndusInd Bank Share Price:

At the time of writing, IndusInd Bank's share price traded at Rs 761.10 apiece, up by 3.43% on BSE, with a market cap of Rs 59,983.30 crore. Overall, in the early trade, the stock jumped by as much as 4.3% to an intraday high of Rs 767.65 apiece.

IndusInd Bank Discrepancies:

As per the regulatory filing, IndusInd Bank had carried out an internal examination after it disclosed on March 10, that they noted certain discrepancies in accounts balances of its derivative portfolio. At that time, the internal review reflected that IndusInd had estimated an adverse impact of approximately 2.35% of the Bank's Net Worth as of December 2024.

IndusInd Bank also disclosed the ongoing review by an external agency which was independently reviewing the internal findings.

On April 15, the bank received the report from the external agency. The external agency has identified discrepancies, inter alia, relating to derivative deals. The Report has quantified the negative impact of the above as of 30th June 2024 at Rs 1,979 crore.

Based on The report, said, "the Bank has assessed an adverse impact (on a post-tax basis) of 2.27% to the Bank's Net Worth as of December 2024 on account of these discrepancies. The Bank will appropriately reflect the resultant impact in the financial statements for FY 2024-25 and continue to take suitable steps to augment the internal controls relating to the derivative accounting operations of the Bank."

What To Expect Next In IndusInd Bank?

Sources told CNBC-TV18 that the bank's board of directors are likely to submit CEO candidate names around 4-6 months ahead of the current CEO Kathpalia's term ending in March 2026. Further, the bank may see three senior-level exits, including the CEO and deputy CEO. However, the bank has denied claims of having received such a communication.

Further, the lender's Q4 results for FY25 will be keenly awaited. For Q4, brokerage Equirus Securities said, "Expect business growth to remain weak with both Advances/Deposits declining qoq as the bank addresses the issues in its treasury book. NIMs to decline by 15-20bps qoq on interest reverals from MFIs. Slippages to remain elevated from the MFI segment. Expect elevated provisions on account of treasury provisions." Key factors to watch out for are --- trends in collections in VF/MFI, losses and NIM (%) commentary around the treasury book.

Should You BUY IndusInd Bank Shares?

The global brokerage has recommended BUY on IndusInd shares. Macquarie maintained its 'Outperform' rating on the bank while setting a target price of Rs 1,210. The brokerage expects a limited impact of discrepancies on IndusInd. Further, Morgan Stanley stayed on an equal-weight rating for a target price of Rs 775. Morgan stated that the findings of the external audit were broadly in line with estimates.

For instance, IndusInd Bank's external audit expects an impact of Rs 1,979 crore, which is below RBI's assessment of about Rs 2,000 crore. Also, the external audit expected a 2.27% adverse impact on the bank's financial books for FY25, which is lower than IndusInd's own internal audit estimate of 2.35%.

Lastly, as per Trendlyen data, the consensus recommendation from 40 analysts for IndusInd Bank Ltd. is BUY. The average 12-month target price is predicted at Rs 936.63 apiece, hinting at a potential more than 21% upside ahead.

Disclaimer: The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on article mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.