JPMorgan has downgraded IndusInd Bank to “underweight” from its earlier rating of “neutral”. The brokerage has also cut its price target by half to ₹550 from ₹1,100 earlier.
The revised price target implies a potential downside of 33% from Tuesday’s closing levels for IndusInd Bank.
The brokerage wrote in its note that although IndusInd Bank’s book value is secure despite the recent turn of events, its Pre-Provisioning Operating Profit (PPoP) and its Return on Assets (RoA) will take a long time to rebound.
IndusInd Bank’s promoters, the Hinduja family has repeatedly asserted that it will be ready to infuse capital into the lender if the need arises. However, JPMorgan said that such an event should be used as a catalyst by investors to trim their positions in the stock.
“We believe that the bank needs a significant overhaul of processes, which will take time, even after a new CEO and management team are in place,” JPMorgan’s note said.
IndusInd Bank reported a net loss of ₹2,328 crore for the March quarter, which was its first net loss in nearly two decades.
The management, during its earnings call had mentioned that they are confident of submitting the names of a new CEO to the Reserve Bank of India, before the June 20 deadline.
Out of the 47 analysts that have coverage on IndusInd Bank, 22 of them now have a “sell” rating on the stock. 15 analysts have a “hold” recommendation, while 10 of them still have a “buy” rating.
Shares of IndusInd Bank are currently trading 1% lower on Wednesday at ₹812.45. The stock is still down 16% so far in 2025.
