Explained: Why IndusInd Bank shares rose 6% today
Shares of IndusInd Bank surged by nearly 6% on Wednesday, reaching Rs 853.65 per share during the trading session.The sharp rise came after global brokerage firm Nomura upgraded its rating on the stock to 'buy' and increased the target price to Rs 1,050 from Rs 700. This new target price indicates a possible upside of 25% from the current level.Over the last year, IndusInd Bank's stock had fallen by 43.51%. However, it has shown signs of recovery in recent weeks, rising around 8.63% in the past month. Over a longer period, the stock has delivered a gain of 76.11% in the last five years and has increased by 3,754.07% since it was listed on the stock market.NOMURA'S POSITIVE OUTLOOKAnalysts at Nomura believe that most of the bank's old problems have now been addressed. They expect the bank's return on assets (RoA) to reach 1% by the financial year 2027. The brokerage also said that IndusInd Bank's stock is currently trading at 0.9 times its one-year forward book value per share (BVPS), which they consider to be attractive.Nomura also noted that the bank's board seems committed to better governance. A leadership change is expected in the financial year 2026, which may help steer the bank in a new direction.The Reserve Bank of India (RBI) has recognised the bank's efforts to improve, which adds some regulatory comfort for investors. There is also a possibility that RBI may approve a promoter stake hike, which could reduce concerns among shareholders.GOVERNANCE ISSUES AND RECOVERY EFFORTSIn recent months, IndusInd Bank has faced challenges due to governance and accounting-related issues. However, the bank has taken steps to fix these problems. This includes cleaning up its loan book and setting aside one-time provisions to deal with past issues.Nomura compared IndusInd Bank's situation to that of RBL Bank in 2021 and Yes Bank in 2018. Both banks went through similar leadership changes when concerns about asset quality were raised. While their short-term performance was weak at the time, they later saw a recovery once their financial position became strongerDespite recent troubles, Nomura pointed out that IndusInd Bank's capital and liquidity levels remain strong. The bank has a Common Equity Tier-1 (CET-1) ratio of 15.1% and a liquidity coverage ratio (LCR) of 118%. These numbers suggest the bank has a good buffer in case of financial stress. The brokerage also highlighted the bank's strong presence in the retail market, which may help it recover profitability faster.IMPROVED EARNINGS FORECASTNomura has raised its earnings per share (EPS) estimates for IndusInd Bank by 14% to 16% for the financial years 2027 and 2028. This upgrade is based on higher expected net interest income (NII) and lower credit costs.According to the new estimates, the bank's RoA could range from 0.8% to 1.1%, while return on equity (RoE) is expected to be between 7% and 10% for the period between FY26 and FY28.The market responded positively to Nomura's upgrade and new projections, leading to a 5% rise in the stock price.
advertisement
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Indian Express
37 minutes ago
- New Indian Express
Consumption expenditure to pick up progressively: ITC
FMCG major ITC expects consumption expenditure to pick up progressively led by continued recovery in rural demand backed by a good monsoon. The Kolkata-headquartered conglomerate also expects improvement in urban demand as inflation stabilises and tax cuts announced in the Union Budget boost disposable incomes. ITC's outlook reflects persistent weakness in urban consumption, a growing concern for major FMCG firms that have faced sluggish growth for several quarters. 'The cumulative impact of pick-up in cape in the second half of FY 2024-25 and front loading of Government capex outlay in FY 2025-26, along with interest rate cuts and liquidity support from RBI, would also be supportive of growth…While higher capital expenditure outlays and focus on infrastructure are expected to drive growth and competitiveness of domestic manufacturing, focus on agri-related schemes is expected to boost farmers' welfare and rural consumption demand, spurring a virtuous consumption-investment-employment cycle,' said ITC its latest annual report.
Economic Times
an hour ago
- Economic Times
India's foreign debt jumps 10% to $736.3 bn; external debt-to-GDP also rises
India's external debt increased by 10 per cent to USD 736.3 billion at the end of March 2025 compared to USD 668.8 billion in the year-ago period, the Reserve Bank said on a percentage of the GDP, the external debt increased to 19.1 per cent at the end of the recently concluded financial year from 18.5 per cent a year ago, it a year which saw some volatilities in the currency markets, the RBI said the "valuation effect" due to the appreciation of the US dollar against the rupee and other currencies amounted to USD 5.3 billion, while if one were to exclude the valuation effect, external debt would have increased by USD 72.9 billion instead of USD 67.5 billion in the overall debt included USD 261.7 billion of loans taken by non-financial corporations, USD 168.4 billion by the government and USD 202.1 billion by deposit-taking corporations, excluding the central bank, the RBI said. At March-end 2025, long-term debt (with an original maturity of above one year) was USD 601.9 billion, an increase of USD 60.6 billion over the year. The share of short-term debt (with original maturity of up to one year) in total external debt declined to 18.3 per cent at March-end 2025 from 19.1 per cent a year ago, but the ratio of short-term debt to foreign exchange reserves increased to 20.1 per cent in FY25 against 19.7 per cent at the end of March dollar-denominated debt remained the largest component of India's external debt with a share of 54.2 per cent at March-end 2025, followed by debt denominated in the rupee (31.1 per cent), yen (6.2 per cent), SDR2 (4.6 per cent), and euro (3.2 per cent), the RBI said. Loans remained the largest component of external debt, with a share of 34 per cent, followed by currency and deposits (22.8 per cent), trade credit and advances (17.8 per cent) and debt securities (17.7 per cent).
India Gazette
2 hours ago
- India Gazette
Positive trajectory in Indian economy continues in 2025-26, all indicators indicate resilience: FinMin
New Delhi [India], June 27 (ANI): The positive trajectory in the Indian economy appears to be continuing in 2025-26, with initial high-frequency indicators suggesting that economic activity has remained resilient, according to the Ministry of Finance's monthly report, released on Friday. High-frequency indicators such as e-way bill generation, fuel consumption, and PMI indices point to continued resilience. 'Rural demand has strengthened further, supported by a healthy rabi harvest and a positive monsoon outlook,' the monthly economic review of the finance ministry said. 'Urban consumption is being supported by increased leisure and business travel, as seen in the rise of air passenger traffic and hotel occupancy.' However, the report noted that there are signs of softening in areas like construction inputs and vehicle sales. Retail and food price inflation registered a sustained and broad-based decline in May 2025, driven by robust agricultural production and effective government interventions. Continuing its downward trend, consumer price inflation in India hit an over six-year low in May, in respite to common people. According to the statistics ministry, the year-on-year inflation rate based on Consumer Price Index (CPI) for the month of May was 2.82 per cent (provisional). It is the lowest year-on-year inflation since February 2019. The inflation rate is within the Reserve Bank of India's (RBI) manageable range of 2-6 per cent. Retail inflation last breached the Reserve Bank of India's 6 per cent upper tolerance level in October 2024. Since then, it has been in the 2-6 per cent range, which the RBI considers manageable. Coming back to the finance ministry report, India's economic momentum continues to grow, reflecting the country's ability to navigate complex global challenges while sustaining domestic growth drivers. In 2024-25, real GDP grew by 6.5 per cent, aligning with the Second Advance Estimates. 'This growth came amid a challenging global environment marked by geopolitical tensions and trade uncertainties. Robust domestic demand, particularly a rebound in rural consumption, steady investment activity, and a positive shift in net exports, underpinned the economy's resilience. The services sector continued to be the main driver of growth on the supply side. Industrial output also expanded, with strong growth in construction and a stable performance in manufacturing. The agriculture sector rebounded, bolstered by favourable monsoon conditions and record food grain production,' the report read. On the external front, India's total exports (merchandise and services) recorded a year-on-year growth rate of 2.8 per cent in May 2025, reflecting the resilience of exports amid tariff uncertainties and subdued global economic conditions. As of June 13, 2025, foreign exchange reserves remain strong, standing at USD 699 billion, which provides an import cover of 11.5 months. Additionally, the Indian rupee has experienced moderate volatility, in contrast to the more pronounced adjustments observed in other economies, the ministry said. The labour market indicators show signs of stability. 'White-collar hiring witnessed a rise in hiring with core sectors such as AI/ML professionals, Insurance, Real Estate, BPO/ITES, and Hospitality leading the hiring growth. The employment sub-indices of the PMI indicate strong employment growth, with the employment sub-indices reaching a high. Formal job creation is also on the rise, as indicated by the growing net payroll additions under the Employee Provident Fund Organisation,' it added. As was widely expected, the Indian economy grew by 6.5 per cent in real terms in the recently concluded financial year 2024-25, official data showed recently. The Reserve Bank of India had projected 6.5 per cent GDP growth for the fiscal year 2024-25. In 2023-24, India's GDP grew by an impressive 9.2 per cent, continuing to be the fastest-growing major economy. According to official data, the economy grew 8.7 per cent and 7.2 percent, respectively, in 2021-22 and 2022-23. This February, the World Bank said India will need to grow by 7.8 per cent on average over the next 22 years to achieve its aspirations of becoming a developed country by 2047. However, the World Bank asserted that getting there would require reforms and their implementation to be as ambitious as the target itself. To realise the vision of 'Viksit Bharat', a developed nation dream by 2047, India will need to achieve a growth rate of around 8 per cent at constant prices, on average, for about a decade or two, the Economic Survey document for 2024-25 tabled on January 31 asserted. India has made quite a turnaround, climbing the ladder of economic growth. This can be gauged from the 11th in 2013-14, India has positioned itself to become the fourth largest economy in 2025-26. Even as India has overtaken many countries in terms of the size of the economy over the past decade, the per capita income in India however remains very low. (ANI)
