By Siddhi Nayak and Hritam Mukherjee
(Reuters) – IndusInd Bank’s shares rose as much as 4.2% on Wednesday, a day after the private lender said it would take a smaller-than-expected hit to its net worth after an external review of previously reported accounting discrepancies.
IndusInd was the top gainer on India’s benchmark Nifty 50 index, which was muted, and the banking index, which rose 0.6%.
The rise follows a 7% jump in the shares on the previous day. The bank, after market close on Tuesday, said it estimates a 2.27% hit to its net worth as of December-end against its previous assessment of a 2.35% impact.
IndusInd, India’s fifth-largest private lender by assets, has been grappling with elevated bad loans in the microfinance segment, leading to a drop in profit in the last two quarters.
Its shares have fallen 15% since March 10, when the bank reported an accounting discrepancy in the way it booked currency derivatives stretching back at least six years, with an estimated impact of $175 million.
A shallower hit is “incrementally positive in the near term as the impact of discrepancies will be limited to what was ascertained earlier by management,” brokerage Macquarie said.
Macquarie and Morgan Stanley both said that the focus would shift to a forensic audit report, and causes of the discrepancies will be closely watched by investors.
“IndusInd’s valuations remain attractive from a medium-to-long-term perspective,” said Kranthi Bathini, director of equity strategy at WealthMills Securities.
(Reporting by Siddhi Nayak in Mumbai and Hritam Mukherjee in Bengaluru; Editing by Mrigank Dhaniwala)
