IndusInd Bank faces loan growth pressure; Here’s what Morgan Stanley has to say

Synopsis: IndusInd Bank’s net advances fell 13% YoY, while deposits stabilised at Rs. 3.94 lakh crore. CASA ratio eased to 30.3%. Morgan Stanley maintains an “equal weight” rating with a Rs. 785 target, implying 14% downside.

This is the 6th largest private sector bank in India, serving over 40 million customers nationwide, and is also India’s 2nd largest microfinance lender is now in the spotlight after its net advances fell by 13% year on year.

With a market capitalisation of Rs. 71,130 cr, the shares of IndusInd Bank Ltd are currently trading at Rs. 913 per share, increasing 2% in today’s trading session, making a high of Rs. 918, up from its previous close of Rs. 899.50 per share.

Business Update

IndusInd Bank Limited has informed about its key business and financial indicators. The Bank’s net advances stood at Rs. 3,18,844 crore as of December 31, 2025, compared to Rs. 3,25,881 crore as of September 30, 2025, and Rs. 3,66,889 crore as of December 31, 2024. This reflects a year-on-year decline of 13.1% and a quarter-on-quarter decrease of 2.2%, indicating moderation in credit growth during the period.

The bank’s total deposits amounted to Rs. 3,94,022 crore as of December 31, 2025, as against Rs. 3,89,600 crore at the end of September 2025 and Rs. 4,09,438 crore as of December 31, 2024. 

Deposits declined by 3.8% on a year-on-year basis, while registering a modest quarter-on-quarter growth of 1.1%. The CASA (Current Account Savings Account) ratio stood at 30.3% as of December 31, 2025, compared to 30.7% in the previous quarter and 34.9% in the corresponding quarter of the previous year.

The Bank also highlighted that retail deposits and deposits from small business customers aggregated to Rs. 1,84,550 crore as of December 31, 2025, broadly stable compared to Rs. 1,84,144 crore as of September 30, 2025, but lower than Rs. 1,88,731 crore as of December 31, 2024. 

Morgan Stanley has reiterated its cautious stance on IndusInd Bank, maintaining an “equal weight” rating on the stock with a target price of Rs. 785, which is 14% downside from current levels. The brokerage’s view reflects ongoing pressures on the bank’s balance sheet growth and deposit franchise, as highlighted by the latest business updates and quarterly trends.

About the company 

IndusInd Bank is one of India’s leading financial services institutions, offering a comprehensive range of banking solutions to a diverse customer base. The Bank serves around 42 million customers across the country, including individual consumers, large corporates, government bodies, public sector undertakings, and small and medium enterprises, positioning itself as a trusted financial partner across segments.

Revenue of the company slipped from Rs. 12,264 cr in Q1FY26 to Rs. 11,609 cr in Q2FY26. Financing loss widened from Rs. 1,350 to Rs. 2,235 cr. Net profit declined to a loss of Rs. 437 cr from a profit of Rs. 604 cr. 

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