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Shares of IndusInd Bank Ltd .,the Mumbai-based private lender, are witnessing extremely choppy moves on Wednesday, March 12, after witnessing their biggest single-day drop on record a day prior. The stock fell as much as 7% in early trading before staging a sharp recovery from the lows.
The stock is still oscillating between gains and losses. It must be noted that the stock is in the F&O ban, which means no new positions can be created in the stock. At the lows on Wednesday, IndusInd Bank's market capitalisation had briefly dropped below the mark of ₹50,000.
Tuesday's record drop had resulted in an erosion of close to ₹20,000 crore in IndusInd Bank's market capitalisation. "On one side, the hedging mechanism remain absent in this particular transaction, amounting to such huge amount of loss and on the other side, the reporting mechanism also remain absent, and that is where the issues of trust arise. At this point of time, because the price significantly corrected, the downside may be less comparatively but enough amount of confidence to gain, one will have to pass through a quarter result, and then after one can possibly look into this particular stock," Deven Choksey of DRChoksey Finserv told CNBC-TV18.
IndusInd Bank's shares fell 27% on Tuesday after a slew of brokerages downgraded the stock and cut their price targets on the lender. Also Read: IndusInd Bank Share Crash: Lender has 6 lakh retail shareholders; Mutual Fund holdings double in 12 months With this fall, IndusInd Bank's valuation is now at par with a lot of mid-sized state-run banks. At the current price, IndusInd Bank shares are trading at 0.
67 times their 12-month forward price-to-book multiple. This made it the only private lender who trades at a multiple less than 1 times book. IndusInd Bank's MD & CEO, Sumant Kathpalia, in an exclusive interaction with CNBC-TV18, assured investors that the bank will remain profitable in the March quarter despite this significant treasury loss.
"This is a one-off event and not a recurring issue. We will absorb the loss in this quarter, but the bank's profitability will continue," Kathpalia stated. 49 analysts now have coverage on IndusInd Bank, of which 10 of them now have a "sell" or equivalent rating.
18 of them have a "hold" rating, while 21 of them have maintained their "buy" recommendation on the lender. Shares of IndusInd Bank briefly turned positive on Wednesday and are currently trading 0.8% lower at ₹650.
45. Also Read: IndusInd Bank worries mount — but depositors have little to fear.
