IndusInd Bank Tumbles Following CEO’s Short Tenure Extension

Shares of IndusInd Bank cracked by about 6% on March 10, touching its lowest since July 2022 after the banking major gave a go ahead to approve a shorter extension to its CEO's tenure.

As of 11:05 a.m., the stock was down by 3.3% at ₹905.85.

The bank said on March 8 that it has received approval from the Reserve Bank of India to reappoint Sumant Kathpalia as the company’s CEO for one year, which is shorter than the typical three-year extension.

In a note Emkay Research said, “Although the RBI has not provided any explanation for only a one-year extension, we believe it is not satisfied with progress on the conditions set by it during the earlier term extension, amid other concerns including mismanagement of the microfinance (MFI) portfolio leading to higher NPAs (non-performing assets).”

Jefferies said that bank's deputy CEO Arun Khurana could be a front-runner for the top post.

“Until IndusInd's succession planning is clarified and stability achieved in MFI & auto loans, we think the stock will be rangebound,” Jefferies said.

Close to six brokerages cut their target price on the stock. As per a data compiled by LSEG, the median 12-month price target of 38 brokerages now stands at ₹1,210 against ₹1,280 a month ago.