IndusInd Bank shares plunge after Q2 results disappoint; key highlights and analyst views

Private sector lender IndusInd Bank's stock came under pressure last week after its quarterly earnings failed to meet market expectations. The bank reported a 39% yearly decline in net profit for the July-September quarter to Rs 1,325 crore, lower than analyst projections.

Key highlights from IndusInd Bank's second quarter performance:

• Net interest income grew 5% to Rs 5,347 crore but net interest margin contracted to 4.08% from 4.29% a year ago.
• Deposits increased 15% to over Rs 4 lakh crore with the CASA ratio staying strong at 35.87%.
• Gross and net NPAs edged up marginally while provisions more than doubled to Rs 1,820 crore.
• Capital adequacy ratio fell to 16.51% from 18.21% a year ago as profitability weakened.

Analysts are concerned over the squeeze in margins, asset quality challenges in certain segments, and elevated provisions impacting earnings. While deposit growth was robust, lower yielding microfinance loans contracted. With profits missing estimates, brokerages have cut EPS estimates for IndusInd Bank by 9-25% over the next two years. Investors will closely monitor how the lender manages profitability and credit costs going forward.