Private bank, IndusInd Bank on Monday said that it expects a 2.35% decline in its net worth by December 2024, following discrepancies uncovered during an internal review of its accounts, reported news agency Reuters.
The bank stated in a stock exchange filing that it has appointed a reputable external agency to independently review and validate the findings. However, it did not provide details about the nature of the discrepancies.
“Bank noted some discrepancies in these account balances. Bank’s detailed internal review has estimated an adverse impact of approximately 2.35% of Bank’s Net worth as of December 2024. The Bank has also, in parallel, appointed a reputed external agency to independently review and validate the internal findings.” read the bank statement to Sebi filing.
“A final report of the external agency is awaited and basis which the Bank will appropriately consider any resultant impact in its financial statements. The Bank’s profitability and capital adequacy remains healthy to absorb this one-time impact.” the bank added.
Despite the issue, IndusInd Bank reassured investors that its profitability and capital adequacy remain strong enough to absorb the “one-time impact.”
Meanwhile, IndusInd Bank’s stock closed at Rs 901.95 on Monday, down by 3.71% after hitting the 52 week low of Rs 881.
IndusInd Bank’s shares dropped as much as 5.4% on Monday, falling to Rs 886.4 on the Bombay Stock Exchange (BSE), after investors reacted to the Reserve Bank of India’s (RBI) decision to grant CEO Sumant Kathpalia only a one-year extension, instead of the three-year term recommended by the bank’s board, according to ETmarket report.
This was the second consecutive time the RBI has approved a shorter tenure for Kathpalia than what the board had proposed.
Over the past year, the private lender’s stock has lost 42.45%, with an 8.41% drop in the last three months and a 9.11% decline over the past week.
Brokerages have flagged the development as a potential source of instability for the bank’s strategy.
Emkay Global reduced its target price for IndusInd Bank by 20%, lowering it from Rs 1,400 to Rs 1,125 while maintaining a ‘buy’ rating. The firm highlighted that the RBI’s decision could result in a management transition and uncertainty about the bank’s strategic direction. The revised target price indicates a potential upside of nearly 27% from current levels.
Nuavama was more cautious, citing concerns over a weak microfinance cycle, lack of earnings visibility, and the possibility of an external CEO appointment. The brokerage expects continued stock pressure despite recent declines.
(Disclaimer: The opinions, analyses and recommendations expressed herein are those of brokerage and do not reflect the views of The Times of India. Always consult with a qualified investment advisor or financial planner before making any investment decisions.)
