IndusInd Bank Shares Surge 5% After RBI’s Assurance – Is It the Right Time to Buy?
IndusInd Bank’s stock saw a sharp rebound in early trading on Monday, soaring over 5% after the Reserve Bank of India (RBI) reassured investors about the bank’s financial health. The stock hit an intraday high of ₹707.00 on the Bombay Stock Exchange (BSE) after the central bank’s statement alleviated concerns about a recent accounting discrepancy that had rattled market sentiment.
RBI Calms Investor Fears
The RBI issued a statement on March 15, assuring depositors and investors that IndusInd Bank remains “well-capitalised” with a “satisfactory” financial position. This statement came after the bank disclosed a ₹2,100 crore accounting discrepancy, which had led to a significant drop in its share price last week.
The regulator further stated that IndusInd Bank has already engaged an external audit team to assess and account for the impact of the discrepancy. RBI also directed the bank’s board to ensure all remedial actions are completed within the current quarter (Q4 FY25).
“As such, there is no need for depositors to react to speculative reports at this juncture. The bank’s financial health remains stable and is being monitored closely by the Reserve Bank,” the central bank reassured.
Stock Recovers After a Sharp Fall
Following the accounting issue, IndusInd Bank’s stock had plunged over 28% last week. However, RBI’s strong stance appears to have restored some investor confidence, triggering the recent price surge.
As per the bank’s December 2024 financial report:
- Capital Adequacy Ratio (CAR): 16.46%
- Provision Coverage Ratio (PCR): 70.20%
- Liquidity Coverage Ratio (LCR): 113% (above the regulatory requirement of 100%)
These figures indicate that despite the accounting discrepancy, IndusInd Bank continues to maintain adequate capital and liquidity buffers.
HDFC Mutual Fund Increases Stake in IndusInd Bank
Amid the turbulence, HDFC Mutual Fund has increased its stake in IndusInd Bank, further signaling confidence in the lender’s long-term prospects.
According to a stock exchange filing dated March 13, HDFC Asset Management Company disclosed that its mutual fund schemes now hold a 5.02% stake in IndusInd Bank, up from 4.82%. The fund purchased an additional 15.92 lakh shares on March 11, bringing its total holding to 3.91 crore shares.
Institutional buying often serves as a strong indicator of confidence, and this move by HDFC Mutual Fund could reinforce positive sentiment among retail investors.
Should You Buy IndusInd Bank Shares Now?
The recent rally has sparked a debate among investors—should they buy IndusInd Bank shares at current levels?
According to Anshul Jain, Head of Research at Lakshmishree Investment and Securities, IndusInd Bank recently tested a critical support level at ₹611, triggering a sharp 19% rebound on the back of 1,351% surge in trading volume compared to the 50-day average.
However, Jain cautions that the stock remains volatile.
- Bullish Case: If the recovery sustains, IndusInd Bank could climb towards ₹740.
- Bearish Case: If market sentiment weakens again, the stock could slide back towards ₹551 in the coming months.
Traders are advised to remain cautious, as heightened volatility could lead to sharp price swings in either direction.
Key Financial Ratios of IndusInd Bank
| Financial Metric | Value |
|---|---|
| Capital Adequacy Ratio (CAR) | 16.46% |
| Provision Coverage Ratio (PCR) | 70.20% |
| Liquidity Coverage Ratio (LCR) | 113% |
| Net Interest Margin (NIM) | 4.27% |
| Gross NPA Ratio | 2.11% |
| Net NPA Ratio | 0.64% |
| Return on Assets (ROA) | 1.75% |
| Return on Equity (ROE) | 13.2% |
Conclusion
The RBI’s assurance has temporarily eased concerns surrounding IndusInd Bank, leading to a sharp stock price recovery. The bank remains well-capitalized and continues to attract institutional investors like HDFC Mutual Fund.
However, traders should exercise caution as the stock is likely to remain volatile until the full impact of the accounting discrepancy is assessed and resolved. Long-term investors may consider accumulating at lower levels, while short-term traders should be prepared for sharp price fluctuations.
Frequently Asked Questions (FAQs)
1. Why did IndusInd Bank’s share price jump by 5%?
IndusInd Bank shares surged after the RBI reassured investors that the bank remains well-capitalized and financially stable despite a recent ₹2,100 crore accounting discrepancy.
2. What caused IndusInd Bank’s stock to fall last week?
The stock fell over 28% after the bank disclosed an accounting issue affecting 2.35% of its net worth. This raised investor concerns, leading to a sharp sell-off.
3. Has the RBI taken any action regarding IndusInd Bank’s accounting discrepancy?
Yes, the RBI has directed the bank’s board to complete all necessary remedial actions within Q4 FY25 and ensure transparency in disclosures.
4. What are IndusInd Bank’s key financial ratios?
Key metrics include:
- Capital Adequacy Ratio: 16.46%
- Gross NPA Ratio: 2.11%
- Net Interest Margin: 4.27%
- Return on Equity: 13.2%
5. Should I buy IndusInd Bank shares now?
It depends on your risk appetite. The stock is highly volatile. If the recovery sustains, it could rise to ₹740. However, if market sentiment weakens, it may drop to ₹551.
6. What does HDFC Mutual Fund’s increased stake indicate?
HDFC Mutual Fund increasing its stake to 5.02% suggests confidence in IndusInd Bank’s long-term prospects, which could be a positive signal for investors.
7. Is IndusInd Bank financially stable despite the recent issues?
Yes, as per its latest financials, the bank maintains a comfortable capital and liquidity position, with an LCR of 113%, above the regulatory requirement.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.