FPIs rush to buy Indusind Bank shares, hike stake to 72%

Foreign portfolio investors (FPIs) have lapped up Indusind Bank shares even as domestic investors rushed to exit the counter during the market crash. As on April 8, FPIs raised their holding in Indusind Bank to 72.07 per cent from 55.22 per cent that they held at the end of December 2019, data from depository company NSDL showed. Majority of this 16.85 per cent hike in stake by FPIs in Indusind Bank came during February and March, when the markets were witnessing their worst fall since 2008 financial crises, brokers said.

In its red flag notification issued on April 13, the NSDL said that FPIs are now allowed to buy only 13.98 million shares, which is around 2 per cent of the total paid-up equity of Indusind bank. FPI are allowed to hold 74 per cent stake in private banks in India. The notification also said that FPIs can buy only 0.8 million shares in P&G Hygine and Health Care as the holding limit was approaching its ceiling.

The share price of Indusind Bank crashed by 87 per cent touch a low of Rs235 on March 24 from a 52-week high of Rs1,822 in April 2019. The price fell on the back of bad loan rumours against Indusind Bank especially in the wake of suffering that Yes Bank shareholders had to undergo. A 99 per cent crash in share price of Yes Bank from the top led to panic situation for domestic investor. The Yes Bank shares touched a low of Rs5 in March after government announced a freeze on money lying in its accounts for a week. But the situation was salvaged by the government as it gave preferential allotment to domestic institutions and moneybags in the bank at par value or Rs10. Brokers say, this gave more confidence to FPI shareholders that government will not allow private banks to fail and they became aggressive buyers in banks stocks across.

As on date the market-cap of Indusind Bank stood at over Rs28,000 crore even though it had a pre tax revenue of more than Rs 22,000 crore. The share price of the bank has gained by 74 per cent in less than two weeks after it hit the lowest price in more than a year. The bank reported that its deposits had increased by 4 per cent year on year to Rs 2.2 lakh crore as on March 31 against 1.94 lakh crore a year ago. The banks CASA (current account savings account) ratio stood at 40.5 per cent as against 43.1 per cent in March last year.

IndusInd Bank promoter IndusInd Ltd, Mauritius said it had fully repaid the loan to Citibank London in March and was a debt-free firm. Last month, the bank had informed exchanges about pledging of 23.8 million equity shares equal to 3.43 per cent of current paid up capital of IndusInd Bank owned by IndusInd Ltd in favour of Citibank London against borrowing arrangements availed in September 2016.

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