IndusInd Bank shares jumped 4.6 percent on Wednesday as investors turned bullish on the stock after Nomura upgrade. IndusInd Bank stock price has suffered massively after accounting issues were reported a few weeks ago. However, it seems that investors and traders have moved on and ready to relook at the banking major. IndusInd stock touched intraday high at Rs 855 before closing the session at Rs 847. The stock has declined 12 percent over the last six months. The rally, while grounded in improving fundamentals and regulatory comfort, faces stiff headwinds from unresolved leadership transitions and lingering market skepticism. For investors, this is a calculated contrarian bet: a deeply discounted stock with upside potential—if management can effectively execute promised reforms.

IndusInd Bank’s Sharp Recovery Signals a Potential Inflection Point

Nomura’s Upgrade Fuels 6% Intra-day Rally

In an otherwise cautious equity market, IndusInd Bank's shares surged 6% on June 18, 2025, closing at Rs 855.20 on the BSE. The rally was underscored by a threefold spike in trading volumes, with nearly 10 million shares changing hands across NSE and BSE—a powerful signal of renewed institutional interest. The stock has clawed back 41% from its March 2025 lows of Rs 605.40, though it still remains down 12–17% year-to-date, highlighting the scale of its earlier capitulation.

From a high of Rs 1,550 in June 2024, the stock had nosedived over 60% before beginning its modest climb. The latest upward momentum reflects a shift in perception—though not a full restoration of trust.

Nomura’s Call: A Turnaround Thesis Anchored in Governance Reform

Target Price Raised to Rs 1,050, Implies 24–30% Upside

Nomura’s June 18 upgrade from ‘Neutral’ to ‘Buy’ accompanied a target price hike from Rs 700 to Rs 1,050. This move was not merely price-based optimism; it followed what the brokerage described as a deliberate and well-signaled commitment from IndusInd’s board to reset the institution.

Key Drivers of the Upgrade:

Intent to begin FY26F “on a clean slate”.

Proactive steps toward CEO succession planning.

Endorsement of turnaround efforts by the Reserve Bank of India (RBI).

Anticipated stake hike by promoter Hinduja Group (via IIHL).

Nomura’s India banking research team drew parallels with RBL Bank (2021) and Yes Bank (2018)—cases where governance-led collapses preceded eventual stabilization under reformed leadership structures.

Valuation: Deep Discount Relative to Sector Peers

IndusInd Bank currently trades at just 0.9x its one-year forward book value per share, levels rarely seen outside of systemic banking crises. By comparison, sector leaders like SBI and Bank of Baroda trade at healthier multiples.

Core Strengths Supporting a Re-rating:

CET1 ratio of 15.1% – among the highest in the private sector.

Liquidity Coverage Ratio (LCR) of 118%, ensuring near-term resilience.

A strong, loyal retail franchise that anchors deposit stability.

Valuation alone won’t be sufficient to trigger a full recovery—but it offers a cushion if reform efforts take hold.

March 2025: The Crisis That Broke Investor Confidence

Rs 1,979 Crore Loss in Derivative Trades Revealed

The root of the recent crisis lies in the disclosure of Rs 1,979 crore in losses linked to internal derivative trades and accounting misstatements. This bombshell sparked a 30% share price collapse and led to the resignation of CEO Sumant Kathpalia and Deputy CEO Arun Khurana.

In Q4 FY25, the bank reported its weakest earnings performance:

• Net Loss: Rs 2,328.9 crore vs. net profit of Rs 2,349.15 crore in Q4 FY24.
• Provisions: Rs 2,522 crore, a significant jump from prior periods.
• Interest Income: Fell 13% YoY, denting core performance.

The leadership vacuum and accounting lapses prompted rating downgrades and coverage suspensions by several domestic brokerages.

Market Skepticism Persists Despite Nomura’s Optimism

Historic Low Valuation—Still Not Enough?

While Nomura’s report injected optimism, many fund managers and analysts remain skeptical. The stock, even post-rally, continues to trade at 0.8–0.9x FY27 book, which some see as too cheap, and others as a red flag.

Lingering Concerns:

Risk of additional discrepancies surfacing during ongoing audits.

Uncertainty in appointing a credible new CEO.

Execution risk in implementing reforms post-crisis.

As one institutional investor remarked anonymously, “The market’s not debating whether there were issues. The fear is whether more might emerge.”

Regulatory and Promoter Support: Comfort but Not Certainty

RBI Endorsement Offers a Strategic Safety Net

The RBI’s public acknowledgment of IndusInd Bank’s corrective efforts has added a layer of regulatory comfort. Furthermore, the anticipated move to allow the Hinduja Group to increase its stake—likely beyond the existing cap—could solidify ownership and improve investor perception of stability.

However, such approvals are not yet confirmed, and will likely depend on how the leadership transition is handled in the months ahead.

Financial Outlook: Profitability to Normalize by FY27–28

Nomura has raised its FY27–28 earnings per share (EPS) estimates by 14–16%, citing an expected rebound in net interest income and moderation in credit costs.

• RoA Forecast: 0.8–1.1% over FY26–28
• RoE Projection: 7–10%

Comparatively, the bank projects stronger profitability metrics than SBI and BOB, thanks to IndusInd’s retail-heavy business model and capital strength.

Investor Viewpoint: A High-Risk, High-Reward Trade

IndusInd Bank's narrative is one of volatility—both in stock and storyline. Nomura’s target of Rs 1,050 implies roughly 30% upside from current levels, but that is contingent on management stability, consistent earnings rebound, and absence of further surprises.

Upside Case: Timely leadership overhaul, RBI approval on promoter stake hike, and normalized credit costs by FY27.

Downside Risk: Further governance lapses, regulatory backlash, or prolonged earnings weakness.

This remains a stock for the seasoned, risk-aware investor—those willing to take a bet on turnaround potential, grounded in tangible but nascent reforms.

Conclusion: Eyes on the Boardroom, Not Just the Balance Sheet

IndusInd Bank’s trajectory in 2025 is less about quarterly results and more about leadership resolve. The bank has weathered its worst storm, but recovery isn’t automatic. What comes next will depend on governance, not just guidance.

If the board delivers on its “clean slate” promise for FY26, IndusInd could shift from a wounded name to a high-beta outperformer. But without decisive action, it risks being remembered as another cautionary tale in India’s evolving private banking landscape.