IndusInd Bank shares rose 2% to ₹819 after the lender posted its Q1FY26 financial results, which were better than expected on some counts. However, a deeper look reveals mixed signals, with declining profits, rising provisions, and cautious outlooks from brokerages.
Net Profit Drops Sharply in Q1FY26
The private sector bank reported a 68% drop in standalone net profit, falling to ₹684 crore in Q1FY26. On a consolidated basis, profit fell even further by 72% year-over-year to ₹604 crore.
This sharp decline was mainly due to lower loan growth and a rise in provisions for potential bad loans.
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Net Interest Income Falls 14% YoY
Net Interest Income (NII) dropped 14% year-on-year, coming in at ₹4,640 crore for the quarter. However, this was still above market expectations — Moneycontrol’s poll had estimated NII at ₹4,279 crore and profit at ₹559 crore.
Despite the NII beat, concerns over credit quality and slippages remain strong.
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Brokerages Share Mixed Views: Should You Buy, Sell, or Hold?
The market is divided on the stock’s future. Here’s how leading brokerages have responded:
Macquarie – Underperform | Target ₹650
Macquarie is cautious with an underperform rating, pointing to a potential downside of 19% from the last close. While Q1 results were supported by higher NIMs and treasury gains, these were offset by weak fee income and elevated credit costs.
It expects RoAs to remain below 1% in the near term.
CITI – Sell | Target ₹765
CITI also issued a sell rating, stating that while legacy issues didn’t resurface, fee-to-assets fell to 1.2% and credit costs remained high at 2%.
Stress in the vehicle finance and retail segments led to overall slippages of 3%.
CLSA – Hold | Target ₹725
CLSA has taken a neutral stance, noting that management is focused on stabilising the business, and has submitted MD & CEO nominations to the RBI.
Loans and deposits both fell 3% QoQ, mostly due to weakness in the wholesale segment.
Bernstein – Outperform | Target ₹1,000
Bernstein remains optimistic with an outperform rating, stating that previous clean-up efforts haven’t caused new damage. However, it flagged persistent concerns like weak asset quality, low fee income, and subdued NIMs.
It noted the lack of clear levers to boost Return on Assets (RoA) in the short term.
Capital Adequacy and Stock Performance
As of June 30, 2025, Total Capital Adequacy Ratio (excluding Q1 profits) stood at 16.63%, slightly down from 17.04% a year ago. So far this year, IndusInd Bank shares have declined 17%, reflecting investor concerns despite the recent 2% uptick.
While the Q1 beat offered some short-term relief, the underlying issues—declining profits, high slippages, and cautious broker outlooks—mean that the stock may face challenges ahead. Investors are advised to tread carefully and monitor upcoming quarters for signs of recovery.
