Mutual Funds Suffer Rs 6,000 Crore Blow as IndusInd Bank Plunges 20%: Here’s Who Lost the Most
Mutual Funds : IndusInd Bank’s stock took a massive hit, plunging 20% on March 11, wiping out over Rs 6,000 crore in mutual fund holdings. The steep decline was triggered by the bank’s disclosure that changes in the valuation of its derivative transactions would erode its net worth by 2.4%, raising concerns over credibility and financial stability.
Mutual Funds Take a Big Hit
As of February 2025, 35 mutual funds held 20.88 crore shares in IndusInd Bank, amounting to Rs 20,670 crore in value. After the stock correction, this value dropped to Rs 14,600 crore, dealing a heavy blow to investors.
Top Mutual Funds with the Largest Exposure
The biggest mutual fund investors in IndusInd Bank include:
| Mutual Fund | Pre-Crash Value (Rs Crore) | Post-Crash Value (Rs Crore) | Loss (Rs Crore) |
|---|---|---|---|
| ICICI Prudential MF | 3,779 | 2,998 | 781 |
| HDFC MF | 3,564 | 2,831 | 733 |
| SBI MF | 3,048 | 2,424 | 624 |
| UTI MF | 2,447 | 1,958 | 489 |
| Nippon India MF | 1,826 | 1,461 | 365 |
| Bandhan MF | 1,015 | 812 | 203 |
| Franklin Templeton MF | 740 | 592 | 148 |
What Triggered the Sharp Fall?
The collapse was not due to operational losses but accounting adjustments. IndusInd Bank revealed that changes in derivative valuations would impact its net worth by 2.4%. This means an expected profit reduction of Rs 1,500 crore in Q4 FY25.
Mutual Fund Inflows & Outflows
Despite consistent inflows, mutual funds started pulling out in February 2025, likely sensing trouble.
- Between April 2024 and January 2025, the bank received Rs 10,200 crore in mutual fund investments.
- However, in February 2025, there was an outflow of Rs 1,600 crore, signaling investor caution.
- From its April 2024 peak of Rs 1,576 per share, IndusInd Bank has now lost over 54% in value.
Investor Confidence Shaken
More than the financial hit, analysts believe the real concern is trust. While the loss of Rs 1,500 crore is manageable, the credibility damage could take months—if not years—to rebuild.
To counter skepticism, the bank has appointed an independent external agency to review and validate its internal findings.
What’s Next for IndusInd Bank?
According to Kotak Institutional Equities, the board’s response will be critical in restoring investor confidence. Key areas of focus include:
- Stronger Governance & Risk Management: Investors will be watching closely for policy changes that prevent similar issues in the future.
- Financial Performance Recovery: If IndusInd Bank can improve its asset quality, especially in its microfinance portfolio, the stock might regain lost ground.
- Stable Deposits & Liquidity: The bank must demonstrate that its core business remains strong despite the setback.
Key Financial Ratios of IndusInd Bank (Pre & Post-Crash)
| Financial Metric | Before Crash | After Crash | Change |
|---|---|---|---|
| Market Cap (Rs Crore) | 1,20,000 | 96,000 | -20% |
| Net Worth Impact (%) | 0% | -2.4% | Negative |
| Stock Price (Rs) | 1,250 | 1,000 | -20% |
| Q4 FY25 Profit Impact (Rs Crore) | – | -1,500 | Negative |
Conclusion
While IndusInd Bank’s financials remain stable overall, the stock’s steep decline has rattled investor confidence, particularly among mutual funds. If the bank can address governance concerns and improve asset quality, this could be seen as a temporary setback rather than a long-term issue.
FAQs on IndusInd Bank’s Stock Fall
1. Why did IndusInd Bank’s stock crash by 20%?
The stock fell after the bank disclosed a 2.4% hit to its net worth due to changes in derivative transaction valuations.
2. How much did mutual funds lose due to this crash?
Mutual funds lost over Rs 6,000 crore in market value after the stock correction.
3. Which mutual funds were affected the most?
The biggest losses were seen in ICICI Prudential MF, HDFC MF, and SBI MF, with combined losses exceeding Rs 2,100 crore.
4. Is IndusInd Bank in financial trouble?
While the loss is significant, analysts say the real concern is credibility rather than financial stability. The bank is still fundamentally strong but needs to regain investor trust.
5. How can IndusInd Bank recover from this crisis?
The bank must focus on improving governance, maintaining strong deposit growth, and ensuring stable financials to win back investor confidence.
6. Should investors stay away from IndusInd Bank stock?
The stock remains volatile, and further downside is possible. However, long-term investors should watch for improvements in financial health and governance before making a decision.
7. What steps has IndusInd Bank taken to fix the situation?
The bank has engaged an independent external agency to review and validate its internal findings to reassure investors.
8. Will the stock recover soon?
The recovery depends on how well the bank addresses governance concerns and improves its financial performance. If these issues are resolved, the stock could bounce back over time.
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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.