IndusInd Bank’s shares surged over 5% to ₹694 on Wednesday, recovering from a 26% drop on Tuesday and outperforming peers like Indian Bank, State Bank of India, and PNB, which fell around 2%.
IndusInd Bank Shares Rebound After Addressing Derivative Portfolio Discrepancy
IndusInd Bank faced significant market turbulence following the revelation of a ₹2,100 crore accounting discrepancy in its derivatives portfolio, estimating an adverse impact of ₹1,530 crore. However, the bank assured investors that it has sufficient reserves and capital to absorb the setback.
CEO and Managing Director Sumant Kathpalia stated that the issue was identified between September and October last year, with a preliminary update provided to the Reserve Bank of India (RBI) last week. The final impact will be determined after an external agency submits its report by early April. The bank’s internal review, initiated in response to RBI’s September 2023 guidelines on investment portfolios, highlighted discrepancies in the ‘Other Asset and Other Liability’ accounts, resulting in a projected 2.35% hit to net worth.
Following these developments, the RBI shortened Kathpalia’s reappointment term, and the stock received multiple downgrades from brokerages. The share price suffered a five-day losing streak, plunging 26% on Tuesday alone.
A Nifty 50 constituent, IndusInd Bank had been on a downward trend since March 5, with the sell-off accelerating on March 10. The bank’s market valuation currently stands at ₹53,322.31 crore, after briefly dipping below Yes Bank’s market cap in Tuesday’s trading session.
