IndusInd Bank shares have declined by more than 30 per cent this month and is trading on its book value of just 0.8 times. According to Bersentein, its evaluation is ‘cheap’ accordingly. The brokerage firm has reduced its price target from Rs 1,300 to Rs 1,000 for this stock, which still makes it look like a 47 per cent rise from the current level. Bersenteen evaluated the IndusInd Bank at 1 times its estimated book value for FY 2026. Bersenin has explained the major risks that investors should consider before entering the market at these levels.
The report by Brokerage firm analyst Pranav Gundalapallah said that the bank has 15 percent stake in the bank and 50 percent of them are pledged. In addition, the situation has become more complicated by the current merger-acquisition deal released by the promoter group. Brokerage says that despite a sharp decline in share price, a limited increase in mortgage shares has reduced these concerns to some extent.
Other important concerns of Bersentein include the credibility of the management and the possibility of the exit of the deposits. Bersenten’s report said, “Participation from the management (from June 2023 to June 2024 to CEO and Deputy CEO’s share ownership of asset quality issues, accounting problems and bank troubles) ended confidence in management, which has led to an immediate need for new leadership.”
The more dependence of the bank on wholesale deposits has also increased the risk of large deposits, which is associated with large issues of accounting. Brokerage has said that although the RBI’s statement can help in removing some of these concerns, it has also increased the risk of getting caught in a vicious cycle of the bank, which is like a mortgage case case. Bersten says that appointment of CEO with a normal three -year tenure is necessary for the bank recovery.
First Published – March 18, 2025 | 10:21 pm IST
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