IndusInd Bank Share Price Falls Over 6% Despite Q1 FY27 Results; Kotak Neo Research Downgrades Stock

Private lender IndusInd Bank share price fell more than 6% on Thursday despite the private sector lender reporting a strong set of June-quarter earnings, as investors reacted on valuation concerns following its recent rally.

The stock declined as much as 4.7% to ₹1,019.65 on the BSE in early trade before extending losses through the session. At around 2:30 pm, IndusInd Bank shares were trading 6.7% lower at ₹1,004.30 on the NSE.

The lender reported its Q1 FY27 results after market hours on Wednesday, posting a sharp improvement in profitability and asset quality.

IndusInd Bank Q1 FY27 Results Snapshot

IndusInd Bank reported a 72% year-on-year rise in consolidated profit after tax to ₹1,037.05 crore for the quarter ended June 2026, compared with ₹604 crore in the corresponding period last year.

On a standalone basis, net profit increased 47% year-on-year to ₹1,003 crore, supported by lower provisions for bad loans.

Net interest income (NII) rose 1% year-on-year to ₹4,685 crore from ₹4,640 crore a year earlier, while net interest margin improved to 3.57% from 3.46%.

Asset quality strengthened during the quarter, with the gross non-performing asset (GNPA) ratio declining to 3.25% from 3.64% a year ago. The bank said the balance sheet continued to improve following the corrective measures undertaken over the past year.

IndusInd Bank Q1 FY27 Results- Research View

Kotak Neo Research described the June-quarter performance as steady, with earnings supported by lower provisions, improving asset quality and stable operating trends.

The research house noted that earnings grew about 45% year-on-year, largely driven by a nearly 20% decline in provisions. Gross slippages moderated to 2.1% of loans from 2.3% in the March quarter, suggesting that credit costs are gradually moving towards normalised levels.

While acknowledging the operational recovery, Kotak Neo Research said the recent rally in the stock has already priced in much of the expected improvement in the bank's performance.

It upgraded its fair value on the stock to ₹850 from ₹800 but downgraded its rating to "Sell" from "Reduce", saying the current market price implies a faster normalisation in return ratios than reflected in its medium-term estimates.

The firm also highlighted that loan growth remained subdued, with the loan book declining 2% year-on-year, while deposits grew 4% over the same period.

Gross NPA improved by 20 basis points sequentially to 3.3%, while the net NPA ratio remained broadly stable at around 1%. Credit cost eased to 1.7% from 1.9% in the previous quarter, and the management reiterated its target of achieving a return on assets of more than 1% by the fourth quarter of FY27.

Despite these improvements, Kotak Neo Research said it was not yet convinced that the bank's medium-term return on equity outlook warranted a higher valuation.

Why Did IndusInd Bank Share Price Fall Today?

Although IndusInd Bank delivered stronger-than-expected June-quarter earnings, Thursday's market reaction suggested investors were more focused on valuations than on the quarterly performance.

The stock has rallied sharply in recent months on expectations of a turnaround. With Kotak Neo Research's revised fair value of ₹850 remaining well below the prevailing market price, the downgrade reinforced concerns that much of the bank's operational recovery had already been factored into the stock, triggering profit booking during Thursday's session.

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