Shares of IndusInd Bank surged 3.5 percent to Rs 838 on June 18, following a bullish upgrade by global brokerage firm Nomura. The firm raised its rating on the bank’s stock to “buy” and increased the target price from Rs 700 to Rs 1,050, signaling a potential upside of 25 percent from current levels.
Despite a challenging year that saw the stock drop 13 percent, IndusInd Bank has regained momentum, climbing around 7 percent in the past month alone. Nomura analysts believe most legacy issues have been resolved and forecast a return on assets (RoA) of 1 percent by FY27.
The brokerage highlighted that the stock is currently trading at 0.9 times its one-year forward book value per share (BVPS), making it an attractive investment. They also praised the bank’s board for its commitment to improved governance and pointed to an expected leadership change in FY26 aimed at resetting the bank’s direction.
Regulatory developments provide additional comfort. The Reserve Bank of India’s recognition of IndusInd’s recovery efforts and a potential RBI nod for a promoter stake increase could ease investor concerns.
IndusInd faced turbulence recently due to governance issues and accounting concerns but has taken corrective steps, including cleaning up its loan book and making one-time provisions to address past problems.
Nomura drew parallels with RBL Bank in 2021 and Yes Bank in 2018, where leadership changes amid asset quality concerns initially weighed on performance but ultimately led to recovery as fundamentals improved.
The brokerage emphasized IndusInd’s strong capital and liquidity positions, with a Common Equity Tier-1 (CET-1) ratio of 15.1 percent and a liquidity coverage ratio (LCR) of 118 percent. Its robust retail franchise is expected to support faster profitability growth.
Nomura also raised its earnings per share (EPS) estimates for FY27 and FY28 by 14 to 16 percent, driven by better net interest income (NII) and lower credit costs. The bank’s RoA is expected to range from 0.8 to 1.1 percent, while return on equity (RoE) is projected between 7 to 10 percent over FY26 to FY28.
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