IndusInd Bank Shares Plunge 6% Despite 72% Q1 Profit Jump as Brokerages Flag NIM Compression

Shares of IndusInd Bank Limited dropped as much as 6% on Thursday morning, turning into one of the top gainers turned losers on the benchmark indices following the announcement of its first-quarter earnings for fiscal year 2026–27.

Trading at ₹1,005.00 during the midday session, the lender's stock fell 6.01% from its previous close of ₹1,069.30, reversing recent gains made ahead of the earnings release.

While the bank posted a headline 71.7% year-on-year increase in net profit after tax at ₹1,037 crore for the quarter ended June 30, 2026, the profit beat was largely driven by a 21% reduction in provisions rather than expanding top-line revenue.

The bank's net interest income (NII) grew by a muted 1% year-on-year to ₹4,685 crore, while net interest margins (NIM) squeezed to 3.35% from 3.46% in the year-ago period. Compounding top-line headwinds, non-interest income declined to ₹1,787 crore from ₹2,157 crore in Q1 FY26, pulling overall net revenue down to ₹6,471 crore.

Brokerages Weigh In 

Global brokerage JPMorgan retained its "Underweight" rating on the stock with a target price of ₹820 per share, noting that current market valuations already discount the asset quality turnaround. The brokerage highlighted that while headline earnings beat street consensus, the sustainability of the recovery depends on core revenue trajectory rather than lower provisioning costs.

In contrast, domestic brokerage notes observed that asset quality parameters showed consistent improvement, with gross non-performing assets (GNPAs) declining 18 basis points sequentially to 3.25% and net NPAs improving to 0.95%.

Management Retains Full-Year Growth Outlook

IndusInd Bank management reiterated its intent of achieving a 1% return on assets (RoA) exit rate by the end of FY27, citing Q1 as an operational inflection point.

Management indicated that near-term margin pressure is expected to linger into the second quarter before recovering in the second half of the fiscal year as microfinance disbursements and consumer lending re-accelerate.

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