IndusInd Bank shares dropped 3% on April 4 after global brokerage UBS downgraded the stock to 'Sell', cutting its price target by 22% to ₹600 from the earlier ₹770. The move signals a potential downside of 15% from current levels, marking it as the lowest price target among analysts tracking the stock.

At 10:40 AM, IndusInd shares were trading at ₹686.5 apiece, reflecting investor concerns over multiple risk factors highlighted by UBS.

Key Reasons for UBS Downgrade

1. Deposit Flow Concerns

UBS flagged weak deposit flows as a major risk for IndusInd Bank. The brokerage believes a decline in deposit growth could impact liquidity and financial stability, potentially affecting the bank's ability to maintain loan growth and profitability.

2. CEO Appointment Uncertainty

IndusInd Bank is in the process of appointing a new CEO, and UBS sees leadership transition as a key risk factor. Changes in top management can influence strategic direction, and investors remain cautious about potential policy shifts that could affect the bank’s operations.

3. External Audit Overhang

Market speculation around an external audit report has further fueled uncertainty. UBS pointed to the importance of an external auditor's findings, which could potentially reveal undisclosed financial risks. However, IndusInd Bank has denied receiving any such report from PricewaterhouseCoopers (PwC), countering rumors that a review of its derivatives portfolio was under scrutiny.

Impact on IndusInd Bank's Financial Projections

UBS has revised its growth expectations for IndusInd Bank, taking a cautious stance on its future performance:

• Loan growth forecast lowered by 200 basis points to 10%.

• Net Interest Margin (NIM) projections cut by 20-25 basis points for FY26 and FY27.

• Credit costs expected to remain high at 1.7% in FY26, adding pressure to earnings.

• Earnings Per Share (EPS) estimates trimmed by 14-15% due to lower margins and higher credit costs.

Market Reaction and Analyst Sentiment

Despite UBS's bearish stance, IndusInd Bank shares closed 0.88% higher on Thursday at ₹708.60, indicating mixed investor sentiment. However, the stock has been on a steep decline, having lost 55% from its 52-week high of ₹1,576.

Among 47 analysts tracking IndusInd Bank, opinions are divided:

• 20 analysts recommend 'Buy'

• 18 analysts suggest 'Hold'

• 9 analysts give a 'Sell' rating

Final Thoughts

The IndusInd Bank downgrade by UBS has raised serious concerns about the bank’s future performance. While the bank has denied audit-related speculation, uncertainties around deposit flows and CEO succession continue to weigh on investor sentiment.

With divided analyst opinions and persistent risks, IndusInd Bank’s stock is expected to remain volatile in the near term. Investors should closely watch for updates on the CEO appointment, deposit trends, and any potential audit revelations that could further impact the stock’s trajectory.

The Upcoming IPOs in this week and coming weeks are Aten Papers & Foam.

 The Closed IPOs are  Infonative Solutions Limited, Spinaroo Commercial Limited,Retaggio Industries Limited.