IndusInd Bank share price: Antique cuts target by 17% on likely muted FY26 earnings
Antique Stock Broking, in a note released on Thursday, stated that the normalisation of net non-performing asset (NPA) ratio is likely to result in muted FY26 earnings for IndusInd Bank. The domestic brokerage’s assessment follows an interaction with the head of investor relations at IndusInd Bank and incorporates a cautious approach for the upcoming quarters. The brokerage cut its target price on IndusInd Bank by 17 per cent to Rs 820 from Rs 985 earlier. On Thursday, IndusInd Bank shares were trading flat at Rs 739 apiece.
Among the key takeaways, Antique noted that the new CEO is expected to present a strategic plan within the next three to four months. No further material discrepancies are anticipated in the near term, according to the firm’s outlook.
Antique Stock Broking expects FY26 loan growth to be muted at around flattish to 1 per cent YoY, mainly due to weak vehicle finance growth and continued pressure on retail deposits. The bank has restarted corporate disbursements after a significant decline in the corporate book, but remains cautious. MFI de-growth is expected to continue in 2Q, with stabilization and pickup in subsequent quarters. Overall, loans/deposits are expected to de-grow in 2QFY26, with loan growth in-line with system levels in FY27 and above system in FY28.
Margins for the remaining quarters are expected to be around +/-10 bps versus 1QFY26 levels of 3.46 per cent. While retail deposit growth remains weak, wholesale deposit growth has recovered to pre-March 2025 levels. Margin tailwinds include utilization of excess liquidity, reduction in cost of SA, and maturity of high-cost CDs raised for liquidity purposes.
Operating expense growth is projected to remain in high single digits for the next three years. Core pre-provision operating profit (PPOP) is expected to stabilize by the second quarter and improve thereafter. FY26 and FY27 profit after tax (PAT) will likely be impacted by accelerated provisioning and the build-up of contingent buffers of approximately Rs 1,000 crore in FY27.
The brokerage reduced its FY26, FY27, and FY28 PPOP estimates for IndusInd Bank by 6–8 per cent due to the downward revision in growth estimates for FY26 and FY27 by roughly 150 basis points, resulting in flat/11 per cent YoY growth, down from the earlier 1.5/12.5 per cent. PAT estimates have been reduced by 53/12/12 per cent YoY, primarily due to normalisation of NNPA to 0.5 per cent levels by FY26 end versus earlier assumptions of gradual provisioning.
Reflecting these changes, Antique Stock Broking trimmed its September 2027 target multiple to 0.9x from 1.05x, leading to a revised target price of Rs 820 (down from Rs 985), while maintaining a 'Hold' recommendation.
On asset quality, the brokerage expects provisions to remain elevated due to accelerated provisioning in FY26 and the build-up of a contingency buffer in FY27/FY28. Asset quality is stable in vehicle finance, corporate, and other retail segments (85 per cent of the loan portfolio). The bank does not expect significant impact from tariffs on the gems and jewellery portfolio, which is only 3 per cent of the book and expected to reduce further.
Within the unsecured portfolio (15 per cent of loans), MFI assets (8.5 per cent of total) remain under stress, with further slippages expected in 2Q before improvement later in the year. The upcoming Bihar elections (about 17 per cent of the MFI book) are a key area to monitor, but management does not expect a material impact.
Credit card segment slippages remain elevated, with credit cost normalisation anticipated in two to three quarters. The personal loan segment’s asset quality is stable. Aggregate provisions are projected to stay high in FY26 and FY27 due to both accelerated provisioning and contingency fund build-up. Credit costs are estimated at 2.3 per cent for FY26, 1.4 per cent for FY27, and 1.1 per cent for FY28, compared to 2.1 per cent in FY25 and 2.05 per cent in 1QFY26.
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