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New Delhi:
Private sector bank IndusInd Bank has a record net loss of Rs 2,329 crore in the fourth quarter of FY 2024-25. But despite this bad news, on Thursday 22 May, the bank’s stock made a tremendous recovery in the market and started trading with an edge over the initial decline.
The bank’s stock started with a decline and it fell from 5.7 percent i.e. Rs 725.80. But later it saw recovery and it rose 3.5 percent to Rs 796.70. Around 11:27 pm, it was trading with a gain of 0.52 per cent at Rs 773.95.
Why did the losses happen?
In March, the bank had revealed that in the last few years, the wrong accounting of internal derivative trades has affected Rs 1,900 crore (about 230 million dollars). Also, the internal audit of the microfinance business found that about 660 crore rupees ($ 80 million) was wrongly recorded as an interest up to three quarters.
Management cleaning on the possibility of fraud
On Wednesday, the bank admitted that some employees led to these accounting disturbances and did not deny the possibility of fraud. Bank chairman Sunil Mehta said that all concerns are shown correctly in the quarterly results.
Earnings and margins are affected
In Q4Fy25, the bank’s net interest income was Rs 3,048 crore, which is 43 per cent less than the previous year’s Rs 5,376 crore. The net interest margin also fell by 2.25 per cent, which is a decline of 201 basis points on an annual basis and 168 basis points on a quarterly basis.
Previous quarter figures also weak
In Q3Fy25, the bank’s profit was Rs 1,402 crore, which was 39 percent less than the previous year’s Rs 2,301 crore. Net interest income in Q3 was Rs 5,228 crore, while the net interest margin was 3.93 percent.
Brokerage houses opinion
Following the Q4 results of IndusInd Bank Bank, at least 6 brokerage houses downed their ratings on the stock and 13 reduced the target price. They are concerned about the bank’s profitability and management success.
Shock to shareholders, shares fell around 23% in last 6 months
IndusInd Bank shares have lost about 1 percent in the last 5 trading sessions. It has fallen by 2.6 percent in a month and has fallen by about 23 percent in the last 6 months. In a year, it has submerged the capital of more than 45 percent investors.
Will the situation improve further?
However, the recovery that has been seen in the stock of IndusInd Bank, it seems that the market hopes that the bank has now brought out all the disturbances properly and now the situation can be handled further. But currently investors will have to be vigilant.
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