IndusInd Bank shares fell 26 per cent due to forex derivative misaccounting, resulting in a Rs 1,580 crore loss. Analysts downgraded the stock, citing governance concerns and earnings pressure.
IndusInd Bank shares plummeted nearly 26 per cent on March 11, 2025, due to a major discrepancy in its derivative portfolio. The bank disclosed that forex derivative losses from trades executed over the past 5-7 years had not been accounted for properly, while corresponding treasury gains were recorded in the Profit & Loss (P&L) statement. This misaccounting resulted in an estimated post-tax hit of Rs 1,580 crore, reducing the bank’s net worth by 2.35 per cent.
Multiple brokerage firms, including Nuvama, Kotak Institutional Equities, Emkay Global, and Motilal Oswal, have downgraded the stock, citing concerns over governance, earnings visibility, and credibility. Some have cut their target prices significantly, reflecting a loss of investor confidence.
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The crisis comes amid other negative developments, such as rising microfinance stress, the CFO’s resignation ahead of Q3 results, and the CEO receiving only a one-year extension instead of three. Additionally, the Reserve Bank of India (RBI) has prohibited banks from conducting internal derivative trades from April 2024, further impacting operations.
With the bank expecting a loss in Q4FY25 due to accelerated provisions on its microfinance portfolio, analysts anticipate prolonged pressure on the stock. Investors are likely to remain cautious until external audits confirm the actual financial impact and the bank addresses governance concerns.
Here are the top five mutual funds with high exposure to IndusInd Bank:
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Disclaimer: The article is for informational purposes only and not investment advice.