InvestorQ : IndusInd Bank appears to have given good profit numbers. Why did the share price still fall after the results?
Dhwani Mehta made post

IndusInd Bank appears to have given good profit numbers. Why did the share price still fall after the results?

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Khushi Patel answered.
2 years ago
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For the second quarter ended September 2019, IndusInd Bank announced a 50% growth in its net profit to Rs.1384 crore. Even its net interest income (NII) expanded by nearly 25% to Rs.2900 crore for the September quarter. If you look at the gross NPAs of the bank it widened marginally from 2.15% top 2.19% while the net NPAs expanded from 1.12% to 1.23%. However, the reason the market was disappointed was the near 45% expansion in its fresh provisions which went up from Rs.530 crore to Rs.737 crore.

The reason for the fall in price was that the stock markets are extremely wary of asset quality in IndusInd especially after the Yes Bank and RBL Bank case. In the past the bank was found to have heavy exposures to beleaguered companies like IL&FS, Dewan Housing and even Jet Airways. While some of these are provided for, the markets are worried that many of these loans may not have been provided for. That was the reason for the sharp fall as the markets took the sharp increase in provisions as a cue that the problems of bad loans in the bank were far from over.

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