Why Are Brokerages Divided on IndusInd Bank’s Outlook Despite Asset Quality Stabilization?
IndusInd Bank has drawn mixed reviews from global and domestic brokerages post its Q2FY26 performance. Elara Capital reiterated a Sell rating with a target price of ₹720, citing lingering vulnerabilities around asset quality and strategic uncertainty under the new management. On the other hand, CLSA maintained a Hold rating with a target price of ₹725, acknowledging balance sheet challenges but anticipating an improvement in the second half of FY26.
According to Elara, the bank’s Q2 results reflected ongoing pressure in specific lending segments, especially in its Microfinance Institution (MFI) book. The firm noted that the buffer pool is now fully utilized, leaving limited room for error in provisioning or credit cost management. Elara believes that while the bank’s headline metrics appear stable, the internal credit cycle is still in transition, and sustained improvement is needed to re-rate the stock.
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In contrast, CLSA observed that the bank’s accelerated write-offs in the MFI portfolio indicate a cleaning-up process that could set the stage for recovery in H2FY26. It pointed out that the balance sheet contracted during the quarter, but NIM compression was in line with expectations, suggesting that downside risk is limited. CLSA also noted that the management’s focus on operational realignment is a step in the right direction.
While the short-term picture remains mixed, both brokerages agree that IndusInd’s retail and vehicle finance segments continue to perform well. The key challenge lies in reviving the MFI segment and ensuring consistent credit discipline across the book to restore investor confidence.
| Brokerage | Rating | Target Price (₹) | Key Highlights |
|---|---|---|---|
| Elara Capital | Sell | 720 | Asset quality concerns; strategic uncertainty under new management |
| CLSA | Hold | 725 | Improving MFI outlook; limited downside risk ahead |
Brokerages note that IndusInd Bank’s management is increasingly focusing on strengthening governance, improving provisioning discipline, and diversifying the loan mix to reduce concentration risks. However, Elara remains skeptical of near-term re-rating potential, while CLSA sees potential recovery if the MFI stress cycle concludes by FY26-end.
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Both Elara and CLSA expect the bank’s asset quality to gradually improve over FY26, but credit cost control and execution on strategy remain crucial. Long-term investors may prefer to wait for consistent visibility on growth and profitability before re-entering the counter aggressively.
Investor Takeaway
Indian-Share-Tips.com Nifty Expert Gulshan Khera, CFP®, who is also a SEBI Regd Investment Adviser, notes that IndusInd Bank is in a stabilization phase. While its retail franchise remains strong, caution is warranted given MFI headwinds and balance sheet contraction. The stock may remain range-bound until FY27 visibility improves.
For more research-backed guidance and institutional trend tracking, visit Indian-Share-Tips.com, which is a SEBI Registered Advisory Services.
Related Queries on IndusInd Bank
- Why Did Elara Maintain a Sell Rating on IndusInd Bank?
- How Is IndusInd Bank Managing Its MFI Portfolio?
- What Are CLSA’s Key Observations on IndusInd’s Recovery Path?
SEBI Disclaimer: The information provided in this post is for informational purposes only and should not be construed as investment advice. Readers must perform their own due diligence and consult a registered investment advisor before making any investment decisions. The views expressed are general in nature and may not suit individual investment objectives or financial situations.
