IndusInd Bank shares jump 2% after reporting Q1 results. Should you buy, sell or hold?

Shares of IndusInd Bank jumped 2% to their day’s high of Rs 818.60 on the BSE on Tuesday, July 29, after the private sector lender reported a significant decline in its earnings for the first quarter of the financial year 2025–26 (Q1 FY26). The bank posted a 72% year-on-year (YoY) drop in its consolidated net profit for the June quarter, which came in at Rs 604 crore, compared to Rs 2,171 crore in the same quarter last year.

The steep decline in profitability was accompanied by a fall in the bank's Net Interest Income (NII), which stood at Rs 4,640 crore in Q1 FY26, a 14% drop from Rs 5,408 crore in Q1 FY25. Additionally, the bank's Net Interest Margin (NIM), a key profitability metric, narrowed to 3.46% in Q1 FY26 from 4.25% a year ago.

IndusInd Bank’s net worth in the quarter rose marginally to Rs 62,961 crore, compared to Rs 62,532 crore in Q1 FY25. However, revenue from fees and other income declined to Rs 2,157 crore in Q1 FY26 from Rs 2,442 crore in the year-ago quarter.

Here’s what brokerages say:

Nuvama: Reduce | Target Price: Rs 600

Nuvama has maintained a “Reduce” rating on IndusInd Bank with a target price of Rs 600. The brokerage flagged a sharp decline in fee income and a rise in non-performing loans (NPLs), with return on assets (RoA) currently at just 45 basis points.

While the bank’s management has indicated no significant stress in the commercial vehicle (CV) segment, Nuvama has cut its earnings estimates and reiterated its cautious view. The target price is based on 0.7 times the bank’s estimated FY26 book value. The firm also believes RoA is unlikely to reach 1% through FY27.

Motilal Oswal: Neutral | Target Price: Rs 830 (from Rs 800)

Motilal Oswal has maintained a “Neutral” rating on IndusInd Bank, raising the target price to Rs 830 from Rs 800. The brokerage noted early signs of recovery in operating metrics following the Q4 reset. However, business growth remains muted, with retail loans now comprising 60% of the loan book. Demand for vehicle finance is expected to stay weak.

The bank has exited bulk and certificate of deposit (CD) funding to strengthen its granular retail deposit base. Although asset quality has deteriorated due to stress in the microfinance (MFI) segment, stabilization is expected over the next six months.

Motilal Oswal has marginally raised its FY26 and FY27 earnings estimates by 2.6% and 2.3%, respectively, and projects FY27 RoA at 0.7% and return on equity (RoE) at 6.4%. Key factors to watch include CEO succession and the pace of business revival.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)