01 — At a Glance
The 6th Largest Private Bank That Just Became Everyone’s Favourite Worry Stock
- 52-Week High / Low₹969 / ₹605
- Q3 FY26 Revenue₹11,373 Cr
- Q3 FY26 PAT₹128 Cr
- Q3 EPS₹1.64
- Annualised EPS (Q3×4)₹6.56
- Book Value₹833
- Price to Book1.10x
- Dividend Yield0.00%
- Debt / Equity6.70x
- Gross NPA %3.56%
Reality Check: IndusInd Bank closed Q3 FY26 with ₹11,373 crore revenue (-11.2% YoY), ₹128 crore PAT (-90.9% YoY), ROCE at 6.47%, and Gross NPA at 3.56%. The stock has lost 2% over 1 year and -7.77% over 3 years despite a 23% bounce in the last 6 months. Full-year FY25 EPS was negative ₹26.11 — meaning the bank burned through accumulated profit. Crisil Ratings placed the bank on “Negative Outlook” in August 2025 and declined to remove the watch negative notice. The 6th largest private sector bank is now a textbook case of “how not to manage microfinance and derivative accounting.”
02 — Introduction
Welcome to IndusInd: Where Every Quarter Comes With a Surprise Audit Finding
IndusInd Bank started in 1994 as a new-generation private bank with genuine ambitions. Back then, the story made sense: retail focus, pan-India branches, fintech partnerships, and growth that could outpace the economy. The bank served 40 million customers. It had a subsidiary called Bharat Financial Inclusion Limited (BFIL) that was India’s 2nd largest microfinance lender with 13 million customers. Life was good. Returns were decent. The future looked borrowed from a PowerPoint deck that actually worked.
Then, beginning in March 2025, the bank disclosed a discrepancy in the accounting of derivatives. The CFO and MD resigned. The bank admitted to “unsubstantiated balances” and “income recognition issues” in microfinance. Crisil placed the bank on Watch Negative. An internal audit department was asked to examine “concerns brought to attention during the finalisation of accounts.” The stock fell. Deposits started to flee. Questions multiplied faster than the NPAs.
Q3 FY26 results arrived in January 2026. The bank reported ₹128 crore profit — down 91% YoY — because the microfinance portfolio was imploding, provisioning had to be ratcheted up aggressively, write-offs ballooned to ₹2,612 crore, and the NIM compressed under the weight of deposit repricing and interest-income volatility. New MD Rajiv Anand started on August 25, 2025, and immediately announced the “P.A.C.E.” strategy: Protect, Accelerate, Customer-centricity, and Execution. Essentially: we broke it, now we fix it, and we’d appreciate your patience.
The stock, however, decided hope was attractive and bounced 23% in 6 months. Because apparently, markets prefer the narrative of “we’ve appointed a fixer” to the reality of “we haven’t fixed anything yet.” Let’s dive into the numbers and see if the fix is real or just another quarterly surprise waiting to happen.
Crisil Note (Aug 2025): Rating reaffirmed at AA+/Negative. Removed from “Watch Negative” when MD Rajiv Anand was appointed. Management has committed to “no further material impact from lapses in internal financial controls.” That’s a low bar, but it’s the bar they set.
03 — Business Model: Banking With a Conscience (And a Compliance Problem)
They Lend Money. Badly.
IndusInd operates across four divisions: Corporate & Commercial Banking (~40% of loan book), Retail Banking (~52%), Treasury, and Microfinance (BFIL) (~8%). The model is straightforward: take deposits, lend them at a spread, earn a margin, collect fees, and repeat quarterly for a century or until regulatory oversight catches your accounting. The complexity comes when you realize that in pursuit of growth, the bank spread its capital across segments where it had no edge, extended loans to borrowers it didn’t fully understand, and then realized — years later — that microfinance in India had turned into a collection problem.
By Q3 FY26, the breakdown was clear: Vehicle Finance (₹98,196 cr, 29% of portfolio) is performing reasonably. Retail assets ex-auto (₹62,655 cr) are stable. Microfinance (₹17,669 cr, down 17% QoQ) is a disaster. Gross NPA in microfinance has soared to 16.39% as of June 2025. The bank is now trying to offload risk by pushing 38% of the standard microfinance book through the Credit Guarantee Fund Management Unit (CGFMU), with aspirational guidance to eventually cover 100%. Translation: “we lent money to people who can’t repay, so the government should guarantee the loss.”
The deposit base stands at ₹410,862 crore (June FY25), with CASA (current and saving accounts) at just 31%. Term deposits account for 69% — which means the bank is funding long-duration loans with short-term liabilities that reprice constantly, compressing margins when interest rates are high. Branch network is 3,081 banking outlets, 3,746 BFIL branches, and 3,052 ATMs. The distribution is wide, but the quality of assets it brought in through that distribution is now questionable.
Vehicle Finance₹98,196 Cr29% of Loans
Retail (Non-Auto)₹62,655 Cr18% of Loans
Corporates₹140,000+ Cr40% of Loans
Microfinance NPA16.39%BFIL Stress
Governance Concern: The SFIO (Serious Fraud Investigation Office) sent a letter on Dec 24, 2025, seeking information on the bank’s accounting, derivatives discrepancies, unsubstantiated balances, and microfinance income issues. This isn’t a routine query. This is the agency that investigates financial fraud and complex corporate crimes. The bank disclosed this internally on June 2, 2025, but only publicly disclosed it on Dec 18, 2025 — a 6-month lag. Timing. Everything.
💬 If you were a depositor at IndusInd right now, would the SFIO investigation make you nervous? Drop your honest thought in the comments — banks bank on trust, and trust is a feeling.
04 — Financials Overview
Q3 FY26: The Fall & The Flood
Result type: Quarterly Results | Q3 FY26 EPS: ₹1.64 | Annualised EPS (Q3×4): ₹6.56 | Full-year FY25 EPS: -₹26.11 (LOSS)
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 11,373 | 12,801 | 11,609 | -11.2% | -2.0% |
| Operating Profit | 2,270 | 3,573 | 2,045 | -36.5% | +11.0% |
| OPM % | 20% | 28% | 18% | -800 bps | +200 bps |
| PAT | 128 | 1,402 | -437 | -90.9% | N/A |
| EPS (₹) | 1.64 | 18.00 | -5.61 | -90.9% | N/A |
The Earnings Collapse Explained: Revenue is down 11.2% YoY primarily due to (1) NIM compression from 3.7% (FY25) to 3.35% (Q3, normalized), (2) mix impact as microfinance shrinks while high-cost deposits rise, and (3) interest rate environment where term deposit repricing pushes cost of funds up. But the real killer is the PAT collapse of -91%. Operating profit is down 36.5% YoY because provisions and write-offs have exploded. Q3 saw write-offs of ₹2,612 crore (notably high) and provisions of ₹2,096 crore. The bank is clearing the decks. Q2 PAT was negative ₹437 crore (Q2 was worse), so Q3’s positive ₹128 crore looks like recovery, but it’s just the comparison base getting easier. Full-year FY25 ended with negative EPS ₹26.11 — an annual loss of ~₹2,034 crore.
05 — Valuation: Fair Value Range (If We Can Even Value This)
What’s This Bank Actually Worth When It’s Burning Cash?
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