Indias IndusInd rebounds on bets bank has come clean on accounting issues
BENGALURU/MUMBAI (Reuters) -Shares of India's IndusInd Bank rebounded from sharp falls on Thursday on bets that the worst was behind the private lender, a day after it logged a record quarterly loss, hit by past accounting discrepancies.
Its shares rose as much as 3.5% to 796.70 rupees to be the top percentage gainers on the benchmark Nifty 50. They declined as much as 6% earlier, making them the worst performers on the index.
IndusInd disclosed in March that years of incorrect accounting of internal derivative trades led to a $230 million hit to its accounts. Separately, an internal audit of its microfinance business found that around $80 million was incorrectly recorded as interest over three quarters.
On Wednesday, the lender posted its largest-ever quarterly loss and said it suspects fraud by some employees led to accounting lapses.
The bank's financials reflect full and fair representation of all the concerns brought to its attention, its Chairman Sunil Mehta said in a post-earnings conference call on Wednesday.
Yes Securities said the latest quarter seemed like IndusInd's "attempt to come clean."
Jefferies analysts said that while uncertainty and low profitability will remain concerns for the bank, "historical trends indicate that current valuations are near lows".
At least six brokerages downgraded their ratings on the stock after the results and 13 slashed their price targets, on concerns over profitability and uncertainty over management succession.
IndusInd's CEO, Sumant Kathpalia, and deputy, Arun Khurana, stepped down last month.
"There is no clarity on new management team, how they gain investor confidence, improve profitability and importantly, whether they will execute better than peers," HSBC said.
(Reporting by Kashish Tandon in Bengaluru and Siddhi Nayak in Mumbai; Editing by Mrigank Dhaniwala)
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