IndusInd Bank shares slip as muted retail growth offsets profit surge

IndusInd Bank shares dropped as much as 4.7 percent to ₹1,019.65 in early Thursday trading following the release of its fiscal first-quarter results. The private sector lender posted a 47 percent year-on-year increase in standalone net profit to ₹1,003 crore for the three months ended June 2026, aided by lower provisions.

Despite the bottom-line beat, top-line growth remained constrained. Net interest income edged up just 1 percent to ₹4,685 crore, while retail loan book expansion stayed muted. Business momentum was instead driven by the corporate segment, even as deposit growth benefited from higher retail inflows that pushed their share to 49.5 percent of total deposits.

The bank did see some margin relief, with net interest margin improving to 3.57 percent from 3.46 percent a year earlier. Asset quality also showed sequential gains, as the gross non-performing asset ratio tightened to 3.25 percent from 3.43 percent in the March quarter. The net non-performing asset ratio similarly declined to 0.95 percent.

Return on assets improved to 0.78 percent in the June quarter from 0.45 percent in the preceding three months. Management is maintaining its target to reach an exit return on assets of approximately 1 percent by the end of fiscal 2027. However, yield on assets fell to 8.62 percent from 9.15 percent a year ago, even as the cost of funds improved to 5.05 percent.

Local brokerages offered mixed reactions to the earnings print. Motilal Oswal Financial Services raised its fiscal 2027 and 2028 earnings estimates by up to 19 percent and reiterated a neutral rating with a revised price target of ₹1,125. JM Financial also lifted its earnings projections and maintained an add rating, raising its target to ₹1,130 while noting that much of the recovery is already priced into the stock.

Conversely, Equirus Securities downgraded the stock to reduce from add, setting a March 2027 price target of ₹1,055. The firm highlighted concerns over the pace of earnings recovery and an adverse loan mix pressuring near-term margins. Systematix took a middle ground, raising its target to ₹1,050 while keeping a hold rating.

Highlighting this caution, Equirus Securities noted that sustained execution is vital for the bank. “Core profitability remains modest, with FY28E RoA of ~1.1%, while NIM is likely to remain under pressure in the near term due to an adverse loan mix,” the brokerage stated. They added that consistent execution over the next few quarters will be critical to establish confidence in the recovery trajectory.