IndusInd Bank shares rose 2% to ₹853 on the BSE on October 26, 2026, after the lender returned to profit in the July–September quarter. Jefferies nevertheless lowered its price target to ₹1,130 from ₹1,250, reflecting more cautious earnings assumptions rather than a reversal of its Buy rating.
Key Takeaways
- Lower provisions and stronger fee income supported the bank’s return to quarterly profit.
- Jefferies cut its target because of tighter bank-distributed insurance fee rules and slightly higher expected credit costs.
- Asset quality improved, but lending margins remained under pressure.
Table of Contents
- IndusInd Bank shares gain after a return to profit
- Why Jefferies lowered its target despite the earnings recovery
- Better asset quality meets continued margin pressure
- Conclusion
IndusInd Bank shares gain after a return to profit
The share-price advance followed results approved on October 23 for the second quarter of FY27, ended September 30, 2026. The ₹853 quotation was an intraday price, not a closing level.
The bank’s consolidated quarterly results showed net profit of ₹1,242 crore, compared with a ₹437 crore loss a year earlier. Those figures cover the consolidated group, including its subsidiary and associate, and should be distinguished from bank-only earnings.
Net interest income increased about 4% year over year to ₹4,569 crore, while fee and other income rose 36% to ₹2,248 crore. Together, they lifted net revenue 12.5% to ₹6,817 crore. Provisions and contingencies excluding tax fell 54% to ₹1,223 crore, providing another substantial support to profitability.
| Item | Details |
|---|---|
| Deposits at September 30 | ₹4,28,832 crore, versus ₹3,89,600 crore a year earlier |
| Advances at September 30 | ₹3,63,104 crore, versus ₹3,25,881 crore a year earlier |
| Quarterly operating expenses | ₹3,943 crore, versus ₹4,013 crore in Q2 FY26 |
| Provision coverage ratio | 70.19%, versus 71.81% a year earlier |
| Total capital adequacy ratio | 16.59%, versus 17.10% a year earlier |
Why Jefferies lowered its target despite the earnings recovery
Jefferies said quarterly profit exceeded its estimates, supported by lower credit costs and better fee and treasury income. The brokerage also highlighted 11% year-over-year loan growth and improving asset quality.
Its target-price reduction reflected changes to future earnings assumptions: tighter rules governing fees from bank-distributed insurance products and slightly higher expected credit costs. Jefferies retained its Buy recommendation and saw scope for stronger pre-provision operating profit, even as it considered credit costs close to their bottom.
That distinction explains the apparently conflicting signals. A stronger completed quarter can coexist with a lower price target when an analyst reduces expectations for subsequent earnings.
Motilal Oswal took a different approach, retaining a Neutral rating and a ₹1,050 target while raising its FY27 earnings estimate by 19% and its FY28 estimate by 17%. It cited stronger net interest income and other income. The brokerage targets are analyst assessments, not assured future trading prices.
Better asset quality meets continued margin pressure
Gross non-performing assets fell to 2.73% of gross advances from 3.25% in June and 3.60% a year earlier. The net non-performing asset ratio declined to 0.83%, from 0.95% and 1.04%, respectively.
The improvement was not uniform across profitability measures. Net interest margin stood at 3.23%, below 3.32% a year earlier. Motilal Oswal also noted a 12-basis-point sequential decline against the first quarter’s one-off-adjusted margin of 3.35%.
Motilal Oswal said the bank maintained its target of reaching a 1% return on assets by the end of FY27 and expected loan growth broadly in line with the industry. These remain forward-looking objectives rather than completed results.
Conclusion
The next reporting periods will test progress toward the bank’s FY27 exit return-on-assets target. The key distinction is whether improving asset quality and business growth translate into stronger recurring profitability despite pressure on margins and fee assumptions.
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This FinanceVelix article provides general information, not personalized financial, investment, legal, or tax advice. Market prices, interest rates and economic conditions can change; investments carry a risk of loss. Facts reflect the material available when published and may change. Check important information independently and consult a qualified professional when needed. Mentioning an asset, company, or service is not an endorsement.
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