IndusInd Bank share price tanks 5% to 52-week low as RBI extends CEO term for just one year; brokerages cut targets

Stock market today: Shares of private sector lender IndusInd Bank tumbled over 5% to a fresh 52-week low on Monday, March 10, after the Reserve Bank of India (RBI) extended the CEO’s term for a lesser period than the board sought, prompting brokerages to lower their target prices on the stock.

IndusInd Bank on Friday, March 7, announced that Sumant Kathpalia has been appointed as the Managing Director & CEO of the bank for a further period of one year with effect from March 24, 2025, till March 23, 2026. This marked the second instance when the MD’s term extension was shorter than the board’s proposal.

The RBI’s extension for a one-year term to incumbent MD & CEO will keep uncertainties lingering around the potential leadership transition, as per experts.

“Given the extension is only for a year, the transition (internal or external candidate) and strategic outcome post a new CEO would need to be monitored. In addition, there is a likelihood of transitions in key management positions, which may take place in the next couple of years, creating further uncertainty. We believe recovery could be elongated,” according to analysts at Elara Securities.

IndusInd Bank shares face target price cuts

The uncertainty on the CEO term has further added to the pressure IndusInd Bank has been facing for some time now. The stock has fallen nearly 40% in the ongoing financial year so far.

“IndusInd Bank has reported a muted performance over the past few quarters, led by a combination of factors, including a slowdown in loan growth, high slippages and provisions, and subdued margin performance. Additionally, the speculation regarding the MD’s term extension has contributed to further de-rating in the stock price,” brokerage Motilal Oswal Financial Services said.

The brokerage cut its FY26E/FY27E earnings by 9.3%/10% and estimates IIB to deliver RoA of 1.3%/1.4% over FY26E/FY27E. MOSL believes the current valuations are inexpensive in context to the potential earnings and growth outlook. It maintained a BUY rating but lowered the target price to ₹1,100.

Elara also reduced its target price to ₹1,050 from ₹1,320 due to heightened uncertainty and revised its rating to Accumulate from Buy, given an uncertain near-term outlook. “However, valuation juxtaposed to franchise value suggests a favorable risk-reward in the long term as we believe recovery could be elongated,” added the brokerage.

Another brokerage, ICICI Securities, also lowered their targets to ₹850 (from ₹1,350) and revised its rating on the stock to Reduce from Buy.

“We see heightened uncertainty in the near term on likely kitchen sinking, and the probable names for the MD & CEO candidature. In the near term, we believe the bank could enter a soft growth patch along with bias on prudence,” it said.

IndusInd Bank share price trend

IndusInd Bank share price tanked 5.40% to ₹886.40, its fresh 52-week low on the BSE today. The stock opened at ₹895, lower than its previous close of ₹936.80, and further declined to the day’s low.

The stock has fared poorly in the short and long term, declining 16% in the past one month, 37% in the past six months, and 42% in the past one year, according to Trendlyne data.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.