Nomura upgraded IndusInd Bank to a ‘Buy’ rating from ‘Neutral’ on Wednesday, June 18, and raised its price target to ₹1,050 from ₹700 earlier.
The revised target implies a potential upside of around 30% from the bank’s closing price on Tuesday.
The brokerage cited several positive factors in its note behind the upgrade, including the board’s commitment to improving governance, the ongoing search for a new leadership, and a clear intent to “start FY26F on a clean slate”.
Additionally, recent comments from the Reserve Bank of India (RBI) acknowledging IndusInd Bank’s recovery efforts provide regulatory comfort. The brokerage also said that potential approval from the RBI for the promoter to increase its stake in the bank could help ease investor concerns.
The past few months have been turbulent for IndusInd Bank owing to governance failings and accounting lapses. However, the bank has undergone a significant clean-up of its books and has taken one-time provisions to address legacy issues.
Nomura compared IndusInd Bank’s current situation to that of RBL Bank in 2021 and Yes Bank in 2018, where leadership exits were prompted by market concerns over asset quality.
In those cases, while near-term stock performance remained muted, the brokerage said that performance revived over the medium term as fundamentals improved.
Importantly, the lender’s capital and liquidity positions remain healthy, with a CET-1 ratio of 15.1% and an LCR of 118%. Additionally, the bank’s robust retail business model is expected to support a faster recovery in profitability over the medium term.
Nomura has raised its FY27-28F earnings per share (EPS) estimates for IndusInd Bank by 14-16%, driven by higher net interest income (NII) and lower credit costs. It expects the bank’s return on assets (RoA) to improve to 0.8-1.1% and return on equity (RoE) to 7-10% over FY26–28F.
Nomura also said that IndusInd Bank’s profitability outlook is stronger than that of State Bank of India and Bank of Baroda.
The bank’s current valuation at 0.9 times its one-year forward book value per share (BVPS) appears inexpensive, according to Nomura.
Key risks, as per the brokerage, include the possibility of further discrepancies in the books and delays in appointing new leadership.
Shares of IndusInd Bank settled 1.33% lower on Tuesday at ₹810.30. The stock is still down nearly 17% so far in 2025.
