IndusInd Bank Q4FY25 loss keeps brokers cautious in FY26

Why IndusInd Bank is back on broker radars

IndusInd Bank has drawn sharply mixed brokerage views after a volatile run of quarterly outcomes, ranging from a cleanup-led loss in Q4FY25 to a better-than-expected, but sharply lower, profit in Q1FY26. Even where results beat estimates on specific lines like provisions or operating costs, analysts have largely stayed cautious on growth visibility, asset quality and management transition. Price targets cited in brokerage notes span a wide band of ₹600-₹950, highlighting the dispersion in expectations.

The caution is also linked to the bank’s near-term operating backdrop. Brokerages have flagged stress in unsecured portfolios, including microfinance (MFI), and have pointed to risks around retail deposit behaviour after disclosures on discrepancies. Alongside this, several notes referenced senior management exits and the pending appointment of a new MD and CEO as a key monitorable.

A ‘beat’ in one note, but the broader picture stayed cautious

One set of analyst reactions referenced a March-quarter performance where IndusInd Bank reported a beat on Q4 net profit and in-line net interest income (NII), helped by lower operating expenses and credit costs. Yet, even in that context, analysts largely retained a ‘Hold’ stance. Management commentary cited in those notes included an aspiration to grow loans in line with the system in FY27 and to reach a return on assets (RoA) of 1% by Q4FY27, supported by moderating credit costs and improved earnings growth.

Nuvama Institutional Equities said earnings and credit costs may improve, but called the path to normalised loan growth challenging. It noted the stock trading at 1x FY27E price-to-book value (P/BV) and retained a ‘Hold’ with a target of ₹900 (based on 1x FY27E BV). HDFC Securities, however, maintained a ‘Reduce’ with a target of ₹760, arguing it was too early to identify growth accelerants.

Growth and deposits: what HDFC Securities highlighted

HDFC Securities said the Q4 results beat its estimates due to lower-than-expected provisioning, while it also noted that the bank continued to de-grow its credit book and only marginally improved credit quality. It flagged that credit growth was down 8% year-on-year (YoY), with continued de-growth in wholesale and MFI segments. Deposit growth was also down 3%, though the CASA ratio improved to 31.2% as the bank worked to increase deposit granularity.

Despite management guiding for loan growth close to system levels in FY27, HDFC Securities argued the franchise still lacked visible growth triggers. It also cited constraints such as a sub-par deposit franchise, inadequate provisioning buffers, and stress in the unsecured book.

Motilal Oswal’s RoA improvement call in Q4

Motilal Oswal Financial Services (MOFSL) described the quarter it reviewed as “decent”, supported by stronger NII and sharply lower-than-expected provisions due to improvement in slippages across segments. It said RoA improved to 0.45% from 0.1% in Q3. The brokerage noted that other income remained subdued due to modest fee and treasury income, while operating expenses declined sequentially.

In that note, MOFSL raised earnings estimates by 14% and 18% for FY27E and FY28E, respectively, and projected FY27E RoA/RoE at 0.7%/5.6%. It reiterated a ‘Neutral’ rating with a target of ₹950.

Q1FY26: profit fell 72% YoY, shares still rose

In Q1 FY26, the bank reported a 72% YoY drop in consolidated net profit to ₹604 crore, compared with ₹2,171 crore in the same quarter last year. Reports said the profit beat expectations pegged at ₹559 crore. On the market reaction, shares jumped 2% to an intraday high of ₹818.60 on the BSE on Tuesday, July 29. Another trading snapshot said the stock opened at ₹792.30, touched ₹818.60, and was at ₹802.35 at 10:43 am.

Nuvama, in a separate cautionary note, maintained a ‘Reduce’ rating with a ₹600 target, citing a sharp decline in fee income, a rise in non-performing loans (NPLs), and an RoA of 45 basis points. Motilal Oswal maintained ‘Neutral’ and raised its target to ₹830 from ₹800, citing early signs of recovery in operating metrics after the Q4 reset, while adding that business growth and asset quality remained concerns.

Q4FY25: large loss, lower NII, higher provisions

IndusInd Bank reported a sharp net loss of ₹2,329 crore in Q4FY25 versus a net profit of ₹2,349 crore in Q4FY24. Consolidated NII was reported at ₹3,048.3 crore, and provisions stood at ₹2,522.08 crore, compared with ₹1,743.63 crore a quarter ago. Another set of consolidated highlights said NII was down 43% at ₹3,048 crore versus ₹5,376 crore, and provisions were up 165% at ₹2,522 crore versus ₹950 crore.

The same highlights noted net interest margin (NIM) at 2.25% versus 3.96% QoQ, and an operating loss of ₹4,909 crore versus an operating profit of ₹4,082 crore. Multiple broker notes linked the quarter to accounting discrepancies, possible frauds detected over prior months, and higher slippages in the MFI business.

Broker targets and ratings: a wide band

Several brokerages cut targets following the Q4FY25 cleanup and uncertainty around recovery timelines. Emkay Global raised its target to ₹700 while retaining ‘Reduce’, citing weak loan growth, asset quality concerns and a pending CEO appointment, and said it was prudent to wait for a new MD and CEO to set a long-term strategy. It also referenced Q4FY25 as challenging due to recognition of derivative discrepancies and MFI NPAs and noted senior management exits.

Other cited calls included CLSA maintaining ‘Hold’ while cutting its target to ₹725 from ₹780, HSBC downgrading to ‘Reduce’ from ‘Buy’ with a target of ₹660, and UBS maintaining ‘Sell’ with a target of ₹600. Nuvama also maintained ‘Reduce’ with a target of ₹600 after cutting it from ₹750 earlier, citing low visibility for FY26E and possible pressure on NIM due to high liquidity needs.

Key figures table: quarterly headline numbers and broker range

Market impact: what moved the stock and what still overhangs

The stock reaction in Q1FY26, where shares rose to around ₹818-₹819 despite a 72% YoY profit fall, suggests the market was positioned for weaker outcomes and responded to the extent of the beat and lower provisions in certain notes. In another reference point, the stock closing price of ₹850 was used to show an implied upside or downside of about 11% versus a ₹760-₹950 target range cited by a couple of brokerages.

At the same time, brokerages repeatedly pointed to growth softness and liability-side challenges. Credit growth cited as down 8% YoY and deposit growth down 3% underscore why multiple notes remained hesitant to turn constructive quickly, even when operating metrics showed pockets of improvement such as a higher CASA ratio (31.2%) and RoA improving to 0.45% from 0.1% sequentially in one brokerage’s assessment.

Analysis: why the next phase hinges on governance, growth and liabilities

The common thread across the brokerage commentary is that the earnings trajectory is being evaluated alongside franchise stability. Notes referencing derivative discrepancies, MFI stress, and possible frauds show that investors are not just discounting near-term profitability but also the time needed to rebuild confidence and internal controls. Several calls explicitly tied valuation and targets to uncertainty around management transition and CEO succession, and to the possibility of business disruption.

Management’s longer-range aspiration of 1% RoA by Q4FY27, and brokerage projections of FY27 RoA around 0.7% (with RoE estimates in the mid-single digits), indicate that consensus expectations remain below the stated goal in the near term. Targets being anchored to book-value multiples, such as 1x FY27E P/BV in one note and 0.7x FY26 book value in another reference, reinforce that the debate is centred on how quickly profitability normalises and whether deposit and loan growth can stabilise without adding risk.

Conclusion: cautious calls, with CEO appointment in focus

IndusInd Bank’s recent quarters have produced a mix of estimate beats, sharp profit declines, and a large Q4FY25 loss tied to discrepancies and higher credit costs. That combination has kept brokerages mostly in ‘Hold’, ‘Neutral’ or ‘Reduce’ territory, with targets spread from ₹600 to ₹950. The next set of triggers highlighted in the notes include the new MD and CEO appointment, evidence of sustained improvement in asset quality, and clearer signs of business growth revival.