IndusInd Bank shares crash 3.5% today: Here we decode why
What's the story
Shares of IndusInd Bank plunged by a whopping 3.5% today, making it the biggest loser on the Nifty index. The decline came after global brokerage firm Goldman Sachs downgraded its rating for the private sector lender from 'Neutral' to 'Sell.' The downgrade was based on structural concerns in IndusInd's business model and weak franchise fundamentals.
Earnings forecast
Brokerage slashes earnings estimates for FY26, FY27
Goldman Sachs has slashed its earnings estimates for IndusInd Bank by a staggering 25% and 17% for FY26 and FY27, respectively. The brokerage also revised its target price to ₹722 from ₹634, citing persistent challenges in the bank's growth trajectory. Despite normalization of business in the second half of FY26 and FY27, Goldman Sachs expects IndusInd Bank to continue facing growth headwinds.
Growth hurdles
Declining productivity across branches
Goldman Sachs has pointed out IndusInd Bank's declining market share in loans and deposits, weakening revenue drivers like yields and fee income, as well as deteriorating operational controls. The brokerage also expects the bank's Return on Assets (RoA) to reset lower in the medium term, further limiting its valuation upside. "The bank's franchise has weakened with declining productivity across branches and falling yields due to portfolio mix adjustments," it said.
Market reaction
Shares down 40% in last 1 year
Post the downgrade, IndusInd Bank stocks hit an intra-day low of ₹848 today. The share is now over 43% down from its September 2024 peak of ₹1,498.70. Despite a 6.7% gain in June after a May drop of 2.5%, it still remains well below its previous highs amid ongoing concerns about governance issues and leadership transitions at the bank.