IndusInd Bank Rises Over 3% on MSCI Index Rebalancing Optimism

IndusInd Bank share price rose by over 3% on January 14, trading at ₹973.90 on the BSE. Over the last 2 days, the stock has gained 4%, driven by reports of increased weight in the MSCI index during February’s rebalancing.

Foreign Holdings and Inflows

Foreign portfolio investor (FPI) holdings in the bank decreased from 55.53% in September 2024 to 46.63% in December 2024. The MSCI index rebalancing is expected to positively influence investor sentiment and could lead to a short-term valuation boost for the bank.

Recent Stock Performance

Despite the recent rise, IndusInd Bank has underperformed the market in the past 6 months, declining by 33% compared to a 5% drop in the BSE Sensex. The stock reached a 52-week low of ₹927 on December 20, 2024.

Q3FY25 Financial Performance

• Deposits and Advances

Total deposits fell 1% quarter-on-quarter (QoQ) (+12% year-on-year (YoY)), while advances grew by 2.8% QoQ (+12.3% YoY), increasing the credit-deposit (CD) ratio to 89.6% from 86.5% in Q2FY25.

• CASA Ratio Decline

The bank’s current account savings account (CASA) ratio dropped to 34.9%, compared to 35.9% in the previous quarter and 38.5% a year ago.

• Deposit Challenges

The bank has struggled to build a strong deposit base, with the Bharat Financial acquisition yet to create the anticipated rural deposit network.

Challenges in Lending

IndusInd Bank has faced slow growth in retail lending due to:

• MFI Segment Issues: Macroeconomic challenges impacting Bharat Financial’s microfinance portfolio.
• Auto Finance Struggles: Weak demand in the auto sector.
• Non-Vehicle Loans: Limited growth in personal loans and credit cards.

IndusInd Bank’s short-term performance is supported by the MSCI rebalancing, but its long-term growth will depend on overcoming deposit and lending challenges.

About IndusInd Bank Limited

IndusInd Bank Limited is a private-sector bank in India that provides banking and financial services. Headquartered in Mumbai, Maharashtra, it was established in April 1994 and inaugurated by the then Union Finance Minister, Manmohan Singh.

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