Why IndusInd Bank Share Price is Falling

Investors in Indian banking stocks are worried about a ripple effect as social media draws parallels between the collapse of US based Silicon Valley Bank (SVB) and Signature Bank.

As a result, the Indian share market has witnessed a heavy sell-off in the past few sessions.

In line with the fall, shares of private sector lender IndusInd Bank have also tumbled. Here's why...

#1 Sharp selloff in banking stocks

On Friday, banking regulators in the US shut down a financial partner of the innovation economy, as Silicon Valley Bank (SVB) suffered a swift collapse. It sent shock waves across the tech and banking industries.

The bank catered to a very specific crowd of start-ups, venture capitalists (VCs), and tech firms.

It was the second bank, after Silvergate, that collapsed the week before. This was followed by US banking regulators shutting down the Signature Bank on Sunday, the third bank to close its doors in a week.

All this has negatively impacted sentiment. Even the best banking stocks took a beating as a ripple effect was seen across banking stocks globally.

#2 Curtailed CEO tenure

On 10 March 2023, the Reserve Bank of India (RBI) extended IndusInd Bank CEO Sumant Kathpalia's term by another two years.

This is lower than the expectation that he would be re-appointed for three years.

In September last year, the board of IndusInd Bank approved the reappointment of Kathpalia as managing director and chief executive officer for three years with effect from 24 March 2023.

Kathpalia, who was appointed as MD and CEO of IndusInd Bank in March 2020, has played a key role in turning around the lender.

Investor disappointment over the development led to shares of IndusInd ending lower, as a lower extension may mean a slight pullback on growth and defer re-rating.

This also reflects a need for improvement in the bank's control of liabilities and underwriting.

How IndusInd Bank Shares have performed lately

IndusInd Bank shares have declined by 7% in the month gone by. In 2023 the company has lost over 11% of its value.

The stock touched its 52-week high of Rs 1,275.25 on 20 September 2022 and a 52-week low of Rs 763 on 23 June 2022.

At the current price, IndusInd Bank trades at a PE multiple of 12.3 and a price to book value multiple of 1.6.

The stock's promoter holding stands at 16.5% of the company. Promoters have increased their exposure to the stock after selling their stake continuously in the past three quarters. Promoter holding stood at 15.2% in September 2022, which now stands at 16.5%.

For the December 2022 quarter, FIIs have also increase their stake in company from 43% in September 2022 quarter to 44.5%.

About IndusInd Bank

IndusInd Bank is one of the new-generation private sector banks in India. It commenced operations in 1994.

The bank's business lines include corporate banking, retail banking, treasury, foreign exchange, and more.

The bank's business divisions include retail/consumer banking, consumer finance, global markets, group corporate & commercial banking, and investment banking.

It provides multi-channel facilities, which include automated teller machines (ATMs), net banking, mobile banking, and international debit cards. The bank has multi-lateral tie-ups with other banks providing access to more than 18,000 ATMs.

They also offer DP facilities for stock and commodity segments.

The bank is a pioneer in launching internet banking. The bank specialises in retail banking services and is also working on expanding its network of branches all across the country.

To know more about IndusInd Bank, check out its factsheet and quarterly results on our website.

You can also compare IndusInd Bank with its peers.

IndusInd Bank vs Axis Bank

IndusInd Bank vs HDFC Bank

IndusInd Bank vs ICICI Bank

IndusInd Bank vs Yes Bank

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...