Earnings Outlook
Analysts divided on PAT or loss for IndusInd Bank Q4
This story was originally published at 14:25 IST on 19 May 2025
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By Kshipra Petkar
MUMBAI – Analysts are divided on IndusInd Bank's financial results for the March quarter, mainly due to the provisions it is expected to make to cover the lapses in accounting for some of its derivatives trades. While seven brokerages expect the bank to report a net profit for the quarter, as many as eleven brokerages expect the bank to post a net loss.
The average net profit expected by the seven brokerages is INR 1.65 billion whereas the average net loss expected by the 11 brokerages is INR 4.12 billion. In the year-ago quarter, the bank had reported a net profit of INR 23.47 billion.
"Expect PAT to sharply decline due to higher credit costs and as the bank is expected to take the impact of discrepancies in derivative portfolio on its books in Q4," IDBI Capital said in its pre-earnings report. In March, the bank said an internal review had found certain discrepancies in the accounts of its derivative portfolio. The review had estimated an adverse impact of about 2.35% of the bank's net worth as on Dec. 31. IndusInd Bank's net worth was INR 651.02 billion as on Dec. 31.
In April, after an independent audit, the bank said the accounting hit from these trades had been estimated at INR 19.79 billion, and it would be "appropriately" reflected in the statements for the financial year 2024-25 (Apr-Mar).
Sumant Kathpalia, the managing director and chief executive officer of the bank, and Arun Khurana, deputy chief executive officer of the bank resigned after these lapses surfaced. Recently, the Reserve Bank of India approved the bank's request to constitute a 'committee of executives' to perform the role of CEO until a permanent appointment is made.
The stock has fallen over 21% since the announcement of its December quarter earnings on Jan. 31. At 1241 IST, shares of the bank were 0.3% higher at INR 782.80 on the National Stock Exchange.
The bank's net interest income is expected to fall by over 11% on year to INR 47.7 billion for the quarter, according to the average of estimates of all these 18 brokerages. The net interest income is expected to be in the range of INR 30.07 billion to INR 53.57 billion for the quarter.
Analysts expect the fall in net interest income due to low loan and deposit growth. IDBI Capital said it expects the microfinance book and the vehicle finance book to hit the bank's loan growth in the March quarter. As per provisional figures released by the bank, its net advances in the Jan-Mar quarter were up merely 1.4% on year and down 5.2% on quarter. Deposits, on the other hand, grew 6.8% on year and 0.4% on quarter. The ratio of current account savings account deposits was 32.8% as on Mar. 31, down from 34.9% in Dec. 31.
The net interest margin for the quarter is seen falling on a sequential basis. In the previous quarter, the net interest margin of the bank was 3.93% and it was 4.26% in 2023-24 (Jan-Mar).
Asset quality is expected to worsen on a sequential basis in the March quarter due to higher slippages in the microfinance book. Prabhudas Lilladher expects asset quality to worsen by 25 basis points on a sequential basis. Due to this, the provisions are also expected to inch up in the quarter.
The bank will announce its earnings on Wednesday. Commentary on the performance of the microfinance book, the quality of retail and microfinance asset segments, guidance on loan growth and the status of the external audit report for the trading book will be monitored by analysts.
Following are the Jan-Mar earnings estimates for IndusInd Bank based on reports from 18 broking firms, in descending order of net profit:
|
Brokerage |
Net Interest Income (in INR million) |
Net Profit (in INR million) |
|
Dolat Capital Market |
51,758.00 |
4,575.00 |
|
ICICI Securities |
50,942.00 |
2,662.00 |
|
PhillipCapital (India) |
51,762.00 |
1,869.00 |
|
Anand Rathi Share and Stock Brokers |
48,823.00 |
1,291.00 |
|
YES Securities (India) |
53,565.00 |
489 |
|
Equirus Securities |
51,537.00 |
361 |
|
IDBI Capital Market Services |
49,292.00 |
317 |
|
Prabhudas Lilladher |
37,421.00 |
(-)601 |
|
Ashika Stock Broking |
48,902.00 |
(-)1,184.00 |
|
Motilal Oswal Financial Services |
35,647.00 |
(-)1,430.00 |
|
Emkay Global Financial Services |
49,612.00 |
(-)1,681.00 |
|
Nirmal Bang Equities |
30,067.00 |
(-)2,642.00 |
|
IIFL Capital Services |
50,000.00 |
(-)2,800.00 |
|
Sharekhan |
50,120.00 |
(-)5,390.00 |
|
JM Financial Institutional Securities |
49,679.00 |
(-)6,273.00 |
|
Kotak Institutional Equities |
49,889.00 |
(-)7,373.00 |
|
Elara Securities (India) |
51,180.00 |
(-)7,594.00 |
|
Nomura Equity Research |
48,300.00 |
(-)8,400.00 |
|
Average |
47,694.22 |
(-)1,878.00 |
End
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Ashish Shirke
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