IndusInd Bank profit jumps 72% as shares fall 5% on flat NII
IndusInd Bank's first-quarter profit surged 72% on lower provisions and better asset quality, but a flat net interest income dragged shares down 5% despite bullish analyst upgrades.
IndusInd Bank shares fell 5% to Rs 1,015.10 on the NSE after the Indian private lender reported its first-quarter earnings for the 2027 financial year. Net profit rose 72% year-on-year to Rs 1,037 crore, driven by a sharp drop in provisions rather than revenue growth. The stock decline reflects investor concern over stagnant core lending income despite improving balance sheet health.
Net interest income, a key metric for bank profitability, was effectively flat at Rs 4,685 crore compared to Rs 4,640 crore a year earlier. However, the bank did expand its net interest margin to 3.57% from 3.46% in the prior-year quarter. Bottom-line growth was primarily supported by a reduction in provisions and contingencies, which fell to Rs 1,384 crore from Rs 1,760 crore.
Asset quality metrics showed tangible improvement across the board. Gross non-performing assets fell to 3.25% of gross advances as of June 30, 2026, down from 3.64% a year earlier and 3.43% in the preceding quarter. The net NPA ratio also declined to 0.95% from 1.12% a year ago and 1% at the end of March.
Despite the immediate share price reaction, analysts remain largely constructive. Nuvama Institutional Equities maintained its 'Buy' rating and raised its target price to Rs 1,250, representing roughly 17% upside from the previous close of Rs 1,069.30.
Motilal Oswal took a more cautious stance, reiterating a 'Neutral' rating while lifting its target to Rs 1,125. The firm raised its earnings estimates for financial years 2027 and 2028 by 18% to 19%, projecting return on assets will reach 0.7% this year and 1% next year.
The market's focus on the flat NII highlights how investors are currently prioritizing top-line growth over balance sheet clean-ups in the Indian banking sector. IndusInd Bank now holds a market capitalisation of nearly Rs 69,490 crore. The stock had rallied significantly heading into the earnings release, gaining 18% in the past month and 20% year-to-date, which likely amplified the sell-off as traders locked in gains.
