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IndusInd Bank's share price is trading with a marginal gain on January 13, 2025, reflecting broader market sentiments and the bank's recent developments. The stock has been a focal point for analysts due to the potential doubling of its MSCI weight, expected to drive substantial inflows and mixed updates from its business performance. Let’s explore a detailed analysis of the current price trends and news impacting IndusInd Bank.
IndusInd Bank will likely see a significant increase in its MSCI weight during the February 2025 review. The latest shareholding data for the December 2024 quarter indicates a notable reduction in foreign portfolio investor (FII) stakes, dropping from 55.53% in September to 46.63% in December. This reduction has pushed the foreign headroom well above the 25% threshold, enabling MSCI to apply a full-float factor.
With this adjustment, analysts estimate a potential doubling of the bank’s MSCI weight to approximately 50 basis points, which could attract $250-300 million inflows. Such inflows are expected to drive upward momentum in the stock over three to five trading sessions following the announcement. This anticipated development underscores the significance of FII activities in determining the bank's stock trajectory.
Brokerages have expressed optimism about IndusInd Bank’s valuation, citing its attractive price-to-book value (PBV) ratio of 1.2 times for FY26. Analysts view the stock as undervalued with strong rerating potential from a one-year perspective. The bank's progress in strengthening its deposit franchise and system liquidity improvements are seen as key positives. Additionally, any easing of lending regulations by the Reserve Bank of India (RBI) would act as a strong catalyst for the stock.
A leading brokerage has assigned a "Buy" rating to the stock, setting a target price of ₹1,500. This reflects confidence in the bank's ability to overcome recent challenges and capitalize on growth opportunities.
Despite the positives, IndusInd Bank continues to face challenges in its lending growth, particularly in retail segments. Macroeconomic headwinds have impacted the bank’s microfinance institution (MFI) segment, while its auto finance business struggles with weak demand cycles in the automobile sector. The bank’s non-vehicle retail loan book, consisting of personal loans and credit cards, remains under pressure due to subdued demand.
InCred Equities has highlighted these challenges, noting that the bank's retail lending has been sluggish for several quarters. While the bank’s margin performance is expected to remain stable in Q3 FY25, concerns around asset quality in its MFI and vehicle finance portfolios persist. The brokerage has maintained a "Hold" rating on the stock with a target price of ₹1,350.
The bank’s Q3 FY25 business update revealed mixed results, with unimpressive growth in key lending segments. Analysts are closely monitoring asset quality trends, particularly in the MFI and vehicle finance portfolios, which form a significant portion of the bank’s book. Recent growth in the small corporate portfolio has also raised concerns about potential risks.
The bank's focus remains on addressing these challenges while maintaining its asset quality and stabilizing its lending growth. Improved system liquidity and potential regulatory easing could provide the necessary support for a turnaround.
The share price of IndusInd Bank has displayed volatility in recent sessions. On the hourly chart, the stock is trading near ₹955.45, reflecting a 0.21% decline for the day. The RSI (Relative Strength Index) at 44.93 suggests a neutral momentum, indicating neither oversold nor overbought conditions.
In the shorter-term 5-minute chart, the stock has seen resistance around the ₹961 level, with support forming near ₹951. The moving averages indicate a bearish bias, with the price trading below key short-term averages. Volume analysis suggests moderate trading activity with no significant breakout signals.
Overall, the technical setup highlights a consolidation phase, with traders likely awaiting further cues from broader market trends or fundamental developments related to the MSCI weight review.
IndusInd Bank remains a stock to watch, driven by the anticipation of its MSCI weight doubling and the potential inflows this could attract. While valuation metrics and deposit franchise improvements present opportunities, challenges in lending growth and asset quality remain areas of concern. Analysts have adopted a cautiously optimistic stance, with target prices ranging from ₹1,350 to ₹1,500, depending on their outlook.
The stock’s technical indicators reflect a phase of consolidation, with no clear directional trend emerging. As developments unfold regarding the MSCI review and regulatory landscape, the share price could witness increased volatility and trading interest. IndusInd Bank’s ability to address its challenges and capitalize on opportunities will be crucial in shaping its performance in the months ahead.
