Shares of Mumbai-based private lender IndusInd Bank Ltd. tumbled 25% on Tuesday, March 11, marking its biggest single-day decline. This drop pushed the stock to its lowest level since November 2020, erasing ₹18,000 crore in investor wealth. The sharp fall has brought IndusInd Bank’s valuation in line with mid-sized state-run banks.
At the current price, its shares trade at 0.71 times the 12-month forward price-to-book multiple, making it the only private lender with a multiple below 1. In comparison, public-sector banks like Bank of Baroda (BoB), Punjab National Bank (PNB), and Canara Bank are valued at 0.74 times book.
The steep decline is notable, considering IndusInd Bank had a price-to-book multiple of nearly two times in January 2024. Its stock has now fallen 56% from its peak, following Tuesday’s developments. The plunge came after the bank disclosed accounting discrepancies in its foreign exchange derivatives, an issue arising under new fiscal regulations effective April 2024. This is expected to result in a one-time earnings impact of ₹1,500-2,000 crore ($171-$229 million).
This marks the bank’s sharpest single-day decline since March 2020, making it the worst performer in the Nifty 50 index over the past year. Analysts have flagged concerns over internal controls and predict a significant impact on 2024-25 earnings, with a potential downgrade in the stock’s valuation.
The broader Indian stock market also struggled, with the Nifty 50 down 0.3% and the Sensex slipping 0.36%. The declines were driven by global market weakness, exacerbated by U.S. President Donald Trump’s warnings of a possible recession and tariff concerns.
Investors are closely monitoring the situation as further developments in IndusInd Bank’s financial standing and overall market conditions could influence stock performance.
