IndusInd Bank stock crashes 27% amid expectation of lower net worth on accounting discrepancy

A view of the IndusInd bank. Photo used for representation purpose only.
| Photo Credit: Reuters

IndusInd Bank (IIB) stock slipped 27%, at the NSE, to ₹656.80 on March 11, a day after the bank flagged an adverse impact on its net worth due to a discrepancy on accounting for derivatives holdings. IIB estimated the impact to be at 2.35% of the bank’s net worth.

The bank found out the discrepancy in an internal audit, according to exchange filings.

Going by the information on the bank’s website with respect to its Q3FY25 earnings, IIB’s net worth was at ₹65,102 crore as of December 2024. As per the bank’s estimate, the impact would be about ₹1530 crore.

Brokerage agencies downgraded the rating following the exchange filing form the bank. “We believe this event will shake investor confidence on franchise value. While valuation look low, book value sanctity is under question. We are yet to cut earnings estimates, given a pending external report, but earnings downgrade is imminent. We downgrade to Sell from Accumulate with a lower TP of INR 830 from INR 1,020.” said Prakhar Agarwal, Banking & Financial analyst at Elara Securities in a statement. The ratings given by brokerage agencies have a bearing on the decision of investors to buy, hold or sell the stock. Elara Securities effectively trimmed the price at which the investors should close their positions to ₹830 from ₹1020.

The benchmark Nifty dipped 0.15% to settle at 22,427.35 points.