Bernstein maintains an outperform rating on IndusInd Bank as the stock’s valuation remains attractive. However, Gundlapalle flagged two risks. The first is a substantial promoter holding pledge, covering almost 50% of the holding. “An adverse reaction could push the stock into a vicious cycle. So that’s the biggest risk at this point,” he said.
The second risk the bank’s reliance on wholesale deposits. “That’s always been a known issue for the bank. So in times like these, the risk of a huge outflow of deposits and its implication on growth and profitability, again comes back,” he noted.
Also Read | Moody’s affirms IndusInd Bank’s ratings, places BCA under review for downgrade
Despite the recent turmoil, IndusInd Bank’s asset quality is in line with industry trends. “Asset quality is less of a concern at this point,” said Gundlapalle, suggesting that stability in this area may offer some reassurance to investors.
The current market capitalisation of IndusInd Bank stands at ₹52,773.15 crore.
IndusInd Bank’s shares fell 27% last week, which was the biggest single-day fall on record for the stock after it reported an accounting discrepancy with regard to its derivatives portfolio.
Gundlapalle also shared his views on Bajaj Finserv‘s decision to buy out Allianz’s stake in its life and general insurance business.
Bernstein favors HDFC Bank over ICICI Bank, largely due to its superior deposit growth, particularly in low-cost CASA (Current Account Savings Account) deposits. Kotak Mahindra Bank has recently outperformed on the back of regulatory actions, but Gundlapalle pointed out that its lower deposit growth limits further upside.
“The choice among three boils down to the deposit growth,” he emphasised, indicating that robust CASA growth will be a key factor in determining future bank valuations.
For the full interview, watch the accompanying video
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