IndusInd Bank promoters to buy stake from open market

At a time when YES Bank is struggling and causing heartburns to investors, in a confidence boost measure, IndusInd Bank on Friday announced that its promoters plan to hike stake in the private lender. IndusInd International Holdings and IndusInd, promoters of the Bank, plan to acquire additional shares from secondary market within the overall regulatory prescribed promoter equity holding cap, for private sector banks, the lender said in a notice to the stock exchanges..

Currently, promoters hold 14.38 per cent stake in IndusInd Bank. Among the public, 442 foreign portfolio investors hold 55.22 per cent stake. Major FPIs include Europacific Growth Fund, Bridge India Fund, Government of Singapore, BNP Paribas Arbitrage, Tybourne funds and funds from Route One.

While mutual funds hold 10.86 per cent stake in IndusInd Bank, over 1.8 lakh small retail investors own 5.28 per cent stake.

It may be recalled that the Reserve Bank of India recently approved the appointment of Sumant Kathpalia as MD & CEO of the Bank for a period of three years, effective March 24, after the incumbent Romesh Sobti’s term ends on March 23.

Private sector IndusInd Bank reported a 32-per cent increase in net profit for the third quarter of the current fiscal at ₹1,300.2 crore against ₹985.03 crore in the same period a year ago. The total income of the Bank rose by 25.4 per cent to ₹9,073.93 crore (₹7,232.32 crore). However, the private lender’s provisions surged, as asset quality remains a concern.

Broking firm Motilal Oswal in a recent report said IndusInd Bank’s stock price has corrected steeply over the recent period owing to concerns about its asset quality, CEO succession and adverse macro developments (SC ruling on telecom AGR). “RBI approval thus addresses one of the major overhang on the stock performance prompting us to assess the investment case as IndusInd Bank navigates through residual asset quality challenges,” it said and added: “We turn constructive on the stock given undemanding valuations and maintain ‘buy’ with a price target of ₹1,500.”

Shares of IndusInd Bank slumped 5.62 per cent to close at ₹1,014.30 on the BSE.