Why indusind bank fell today ?

Today, IndusInd Bank’s stock took a significant dip, dropping nearly 10 percent in value and 19 percent in stock price primarily due to investor concerns over multiple issues in the bank’s financial and operational health.

Key Reasons for IndusInd Bank’s Stock Decline

1. Asset Quality Concerns

A major contributor to the fall was a reported increase in non-performing assets (NPAs) and “slippages”—loans that have gone bad. Analysts noted a 20% increase in slippages quarter-on-quarter, primarily due to defaults in sectors such as retail loans, loans against property, and agriculture  . Despite efforts to expand lending, this spike in defaults suggests a rising risk in the bank’s loan book, leading investors to worry about the potential for further defaults and impairments.

2. Disappointing Q2 Results

IndusInd Bank’s Q2 financial performance, while showing year-on-year growth in net profit and interest income, also highlighted challenges. The bank’s net interest income rose by 18% to INR 5,296 crore, but its net interest margin—a measure of profitability—stayed flat at 4.29%. The mixed results underscored solid revenue growth, yet issues like increased provisions and rising costs continued to weigh on the overall profitability .

3. Loan Disbursement Issues

Concerns emerged around irregularities in loan disbursements by Bharat Financial Inclusion Limited (BFIL), a microfinance unit of IndusInd Bank. In a recent whistleblower report, claims surfaced of “evergreening” practices—extending fresh loans to cover up bad loans. Although the bank refuted these allegations, admitting only to minor technical issues, investor confidence took a hit, fearing possible regulatory scrutiny and more stringent compliance costs down the line .

4. Investor Sentiment and Profit Booking

With the stock’s strong performance over the past year, hitting a high of INR 1,694 in January 2024, some investors saw an opportunity to book profits. The broader sentiment in the financial markets, alongside specific concerns over asset quality and operational challenges, further compounded the impact, as investors looked to reduce their exposure amid growing uncertainty .

Final Thoughts

The factors impacting IndusInd Bank’s stock performance reflect both broader financial concerns and specific operational issues within the bank. While the bank is pursuing an aggressive growth strategy in its loan book, investor caution around asset quality and governance concerns remains a barrier to sustained confidence.