The March 2025 quarter results for IndusInd Bank were keenly awaited by investors on Dalal Street, given the spate of accounting problems that have come to light over the past few weeks at the fifth-largest private sector bank, and the exit of the top management.
IndusInd Bank declared a consolidated net loss of Rs 2,328.87 crore in the fourth quarter of FY25 vis-à-vis a net profit of Rs 2,349.15 crore a year earlier. The bank has made a provision of Rs 2,522.08 crore in the fourth quarter of FY 25 vis-à-vis Rs 950.2 crore a year earlier, and it relates to provisions for accounting problems for its derivatives portfolio amounting to Rs 1,959.98 crore.
Also, errors related to its micro-finance portfolio amounting to Rs 422.56 crore have been provided for in the March 2025 quarter results. The consolidated results of IndusInd Bank include Bharat Financial Inclusion and IndusInd Marketing and Financial Services.
Apart from the above problems, the key operational parameter, net interest margin (NIM) for IndusInd Bank was 2.25 % in the March 2025 quarter vis-à-vis 4.26 % a year earlier. Rival, Axis Bank’s domestic NIM was 4.08% in the fourth quarter of FY 25 vis-à-vis 4.16 % a year earlier.
Meanwhile, IndusInd Bank’s advances were broadly flat on a y-o-y basis at Rs 3.45 lakh crore in the March 2025 quarter. In contrast, Axis Bank grew its advances in the March 2025 quarter by nearly 7.8 % y-o-y to Rs 10.4 lakh crore helped by strong demand for credit from SME and mid-corporates
Investors will also be concerned with IndusInd Bank’s net NPA rising to 0.95 % in the March 2025 quarter vis-à-vis 0.57 % a year earlier. In addition, IndusInd Bank reported a return on assets (annualized) of negative 1.74 % in the March 2025 quarter. For HDFC Bank, the largest private sector bank, it was 1.94% in the fourth quarter of FY 25.
Growth Outlook
The RBI is closely monitoring the developments at IndusInd Bank and ensuring full compliance. Investors are also keenly awaiting the appointment of a new CEO of IndusInd Bank and the strategy to bring the bank back to its growth track.
The RBI has been lowering the cost of credit in the banking system through reductions in repo rates and open market operations over the past few months. Credit demand is expected to pick up across the banking system, going forward. However, if IndusInd Bank is not able to compete effectively in the current environment, the bank risks losing its market share in terms of loans / credit facilities provided, going forward.
Nervous investors had pushed the IndusInd Bank stock to a 52-week low of Rs 605.4 on 12 March 2025. The stock had ended Wednesday’s trade 1.4 % lower at Rs 771 and the quarterly results were declared well after the close of trade.
Investors on Dalal Street
IndusInd Bank trades at a consolidated P/E of more than 20 times estimated FY 26 earnings. Axis Bank trades with a P/E of nearly 12 times estimated standalone earnings for FY 26 while HDFC Bank trades with a P/E of nearly 21 times estimated standalone earnings for FY 26.
Clearly, given the uncertainties at IndusInd Bank, investors need to potentially wait for a substantial correction in the stock price before making a long-term investment.
Disclaimer
Amriteshwar Mathur is a financial journalist with over 20 years of experience.
The writer and his family have no shareholding in any of the stocks mentioned in the article.
Disclosure: The writer and his dependents do not hold the Stocks discussed in this article. However, clients of Definedge may or may not own these securities.
The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The articles’ content and data interpretation are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.