Stocks in focus: IndusInd Bank Q1 shock — Corporate loans tumble, deposits shrink; brokers divided on outlook

Shares of IndusInd Bank are likely to stay under pressure after the private lender released a weaker-than-expected business update for the June quarter, raising fresh concerns around slowing loan growth and softening deposit traction.

Sharp decline in corporate loans and deposits weighs on performance, while brokerages remain divided on stock outlook amid leadership uncertainty.

The bank’s net advances stood at Rs 3.34 lakh crore, marking a 3.9 per cent year-on-year and 3.1 per cent quarter-on-quarter decline, driven primarily by a sharp fall in corporate lending. Total deposits came in at Rs 3.97 lakh crore, down 0.3 per cent YoY and 3.3 per cent QoQ, while retail deposits were reported at Rs 1.84 lakh crore, showing a marginal decline. The CASA ratio—a measure of low-cost deposit strength—dropped to 31.49 per cent, down from 32.81 per cent in the previous quarter.

The contraction in loans was most pronounced in the corporate segment, which saw a 14 per cent decline on a yearly basis, worsening from a 6 per cent drop in the March quarter. Consumer loans, while relatively stable, declined 1 per cent QoQ, reversing a 2 per cent increase in the previous period.

The disappointing print has drawn mixed reactions from brokerages:

Morgan Stanley maintained its ‘Underweight’ rating on the stock with a target price of Rs 750, citing continued pressure on loan growth, declining share of high-margin products, and ongoing uncertainty around the appointment of a new CEO.

Citi also reiterated its ‘Sell’ rating with a target of Rs 765, noting that the 3.1 per cent QoQ fall in advances was steeper than its estimates. It flagged a 6.2 per cent QoQ drop in corporate loans, contributing to a 14 per cent YoY decline, and attributed the modest dip in consumer loans to softness in the microfinance segment.

Jefferies, however, remained optimistic, retaining a ‘Buy’ rating with a target of Rs 920. The brokerage acknowledged the decline in loans but said flat retail deposits indicate limited outflows—an outcome that markets might view more favourably. It also noted that the consumer lending book grew 5 per cent YoY, offering a silver lining in an otherwise muted quarter.

Nomura maintained its ‘Buy’ call with a bullish target of Rs 1,050, though detailed commentary from the brokerage was awaited at the time of reporting.

At Rs 856, the stock will remain in focus as the market reacts to the weak update and awaits further management commentary in the upcoming Q1FY26 earnings announcement.