IndusInd Bank Share Price Today LIVE: Shares end 27% lower at ₹655 on reporting net worth impact due to discrepancies in derivative portfolio:
IndusInd Bank hit by ₹2,100 cr accounting lapse, says has enough reserves to absorb impact
IndusInd Bank on Tuesday fire fought the fallout of a ₹2,100 crore discrepancy in accounting, saying it has enough reserves and capital to cover for it, but the management’s assurance failed to arrest the free fall of shares which tanked over 27 per cent on the bourses.
IndusInd Bank CEO and Managing Director Sumant Kathpalia said that the accounting lapse was noted around September-October last year and the bank gave a preliminary update to the RBI about this last week. The final number will be known after the external agency, which the bank has appointed, finalises its report by early April. – PTI
Analysts at Jefferies Financial Group Inc. and Citigroup Inc. said the mismatch totals about 20 billion rupees ($230 million) of the bank’s pre-tax net income, or 2.35% of its net worth.
“While this is specific to certain types of transactions and relates to past years, it clearly reflects weak internal controls,” Prakhar Sharma, an analyst at Jefferies, wrote in a note. The brokerage slashed its earnings estimate for the current financial year by 25%.
The disclosure is the latest blow for the bank controlled by billionaire Hinduja brothers, which has been reeling from concerns about asset quality in its micro-loans book. Separately, the Reserve Bank of India cut short Chief Executive Officer Sumant Kathpalia’s term extension to one year from the three years sought by the lender. The lender’s shares slumped 40% in 2024.
The derivatives were used to hedge foreign currency deposits and borrowings, Deputy Chief Executive Officer Arun Khurana told analysts Monday. The internal trades, halted since April 2024, were meant to tide over poor liquidity in some longer-tenor derivatives, he said, citing an example of a five-year yen deposit to be swapped to rupees. The trades were based on swap valuations, and not marked-to-market, he said.
Introduction
- Foundation and Legacy:
- Established in 1994, inspired by the Indus Valley Civilization, emphasizing innovation and sound business.
- Visionary leadership by Srichand P. Hinduja and the Indian diaspora.
- Customer Base and Network:
- Serves approximately 42 million customers across India.
- Extensive network: 3063 branches/banking outlets and 2993 ATMs.
- Presence in 1,60,000 villages, with international offices in London, Dubai, and Abu Dhabi.
- Financial Performance:
- Current Share price: Approximately Rs 656.
- Total Market capitalization: Rs 51,096 crore.
- Current PE ratio: 7.3 (below median PE of 14.0, indicating potential undervaluation).
- 52-week low: Rs 649; 52-week high: Rs 1576 (demonstrating Stock volatility).
- Book value: Rs 836.
- Dividend Value: 2.52%
- Ownership Structure:
- FII holding: 24.7% (international investor confidence).
- DII holding: 42.4% (strong domestic institutional support).
- The movement of these large holding greatly affects the Market value of the Stock.
- Products and Services:
- Diversified portfolio: microfinance, personal loans, vehicle loans, credit cards, SME loans.
- Broad range of services mitigates risk and ensures stable revenue streams.
- Digital Transformation:
- Emphasis on digital platforms and mobile applications for enhanced customer experience.
- Investment in technology for improved efficiency and reach.
- Digital transformation greatly affect a banks Share value in todays Market.
- Emphasis on digital platforms and mobile applications for enhanced customer experience.
- Risk Management and Compliance:
- Robust risk management frameworks to address credit, operational, and Market risks.
- Strict adherence to regulatory requirements.
- Indian Banking Sector and Market Dynamics:
- Influenced by economic growth, interest rates, regulatory changes, and global events.
- Understanding these factors is crucial for evaluating banking Stocks.
- The overall health of the Market is directly tied to the health of the banking sector.
- Future Outlook:
- Promising growth prospects driven by strong fundamentals and strategic initiatives.
- Challenges include competition, regulatory pressures, and macroeconomic uncertainties.
- Investment Considerations:
- Thorough research and analysis are essential before investing in any Share.
- Consider the company’s financials, business model, and competitive landscape.
- Assess risk tolerance and invest accordingly.
- Understand the risk of investing in the Stock Market.
- Stock Market Disclaimer:
- Investing in the stock market involves risk, including potential loss of principal.
- Information is for informational purposes only and not investment advice.
- Past performance is not indicative of future results.
- Consult with a financial advisor before making any investment decisions.
- The Market is very volatile, and any Stock can lose value.
- This information is for general knowledge and informational purposes only, and does not constitute investment advice.
- Trading in financial instruments involves high risks due to the volatility of the Market.
- You should not invest money that you cannot afford to lose.
- Before making an investment decision, you should seek the advice of a qualified and registered professional and undertake your own due diligence.
Stock Market Disclaimer
Investing in stocks involves risks, including the risk of loss of capital. Past performance is not indicative of future results. Investors should conduct their own research and consult with a financial advisor before making investment decisions. The information provided here is for educational and informational purposes only and should not be considered as financial advice.
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