IndusInd Bank fell 19% on Friday in one of its worst single-day drops since March 2020 after reporting weak Q2 numbers.

What Happened: IndusInd bank's net profit slumped 40% year on year to ₹1,325.45 crore in the September quarter. The lender's net interest income was up 5.3% from the previous year to ₹5,347.26 crore. 

The Q2 numbers missed analysts' estimates of ₹2,207 crore net profit and ₹5,533 crore revenue. 

The bank's net interest margin (NIM) fell to 4.08% from 4.29% in the previous year. While its gross non-performing assets (NPA) and net non-performing assets (NPAs) increased to 2.11% and 0.64% from 1.93% and 0.57%.

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Brokerage Views: Nuvama downgraded the stock to hold and cut the target price to ₹1,290. The brokerage said the lender posted the weakest earnings in the sector so far with the moderating loan growth, sequential fall in net interest income, rise in 30 days past due (DPD) in microfinance (MFI) to 4% from 2% in the previous quarter.

The research firm said the stock may underperform even after correction as stress in the microfinance sector is likely to be high in Q3 along with fee income running low for two quarters. 

Nomura kept a “neutral” call on the stock while cutting the target price to ₹1,220. The brokerage said the company had a weak quarter and the outlook is challenging.

The brokerage cut the FY25-27 earning per share estimates by 22-14% due to soft loan and deposit growths, lower NIMs and fees. The brokerage added that near-term triggers are absent, while the asset quality outlook is challenging. 

Price Action: Shares of IndusInd bank fell 19.71% to ₹1,027.80  on Friday. The stock had fallen 23.73% on March 18, 2020. 

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