google.com, pub-6007374308804254, DIRECT, f08c47fec0942fa0
More

    IndusInd Bank: There will be lingering uncertainty over the next 2-3 quarters, says CLSA


    There will be lingering uncertainty over the next 2-3 quarters over more skeletons in IndusInd Bank’s (IIB) closet and management continuity, according to CLSA.

    The aforementioned observation comes in the backdrop of RBI granting only a year’s extension for the MD (versus three years recommended by the Bank’s board) followed by disclosure of a net worth hit of about ₹1,500 crore due to an accounting gap.

    CLSA analysts, in a report “What next?” said: “If a PSU banker is appointed, there would be even more negative sentiment for the stock. Also, the potential invoking of the promoter’s stock pledge by its lenders would add to the uncertainty.

    “But, over time, we believe its fundamentals will take over. If IIB delivers numbers broadly in line with expectations over the next 4-6 quarters, we believe concerns will subside.”

    Are there any positives?

    The analysts underscored that there are two fundamental positives in the near term — a recovery in microfinance and respite for margins from better banking system liquidity, and rate cuts.

    Further, a non-fundamental positive could be the promoter getting RBI approval to increase its stake in the bank (after its acquisition of Reliance Capital is completed). Any stake

    purchase by the promoter will definitely boost investor confidence.

    The analysts observed that while the RBI has been quite active over the past two years in identifying and rectifying flaws/deficiencies in lenders, there were no red flags raised publicly.

    “The recent accounting discrepancy was not reported by either the bank’s auditors or the RBI over the past 5-7 years.

    “However, the RBI cut the MD’s tenure to one year. The reason may not necessarily be asset quality, but there could be other factors,” they said.





    Source link

    Recent Articles

    Fraternity Members Charged in Death of Southern University Student

    Two more arrests have been made in connection with the death of a 20-year-old Southern...

    If You’re Buying a Home Today, Expect to Keep It for a Long Time

    It seems pretty clear that the housing market has cooled, and is now more of a buyer’s market than a seller’s market.While this...

    8 Ways To Get a Free Old Navy Gift Card

    Want to save money on clothes and get a free Old Navy gift card? Free gift cards can be a great way to...

    Blue Heelers: Williamstown house where iconic TV show’s cop shop was based is set for auction

    A Yarraville house owned by 1954 Bulldogs Premiership player Doug Reynolds and a Williamstown home where Blue Heelers was filmed are to be...

    Related Stories

    Leave A Reply

    Please enter your comment!
    Please enter your name here

    Stay on op - Ge the daily news in your inbox

    google.com, pub-6007374308804254, DIRECT, f08c47fec0942fa0
    google.com, pub-6007374308804254, DIRECT, f08c47fec0942fa0