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IndusInd Bank Poised for Recovery: Lessons from Yes Bank

IndusInd Bank Poised for Recovery: Lessons from Yes Bank and a Focus on Re-Rating Potential

Dharmesh Kant, Head of Institutional Research at Motilal Oswal Financial Services, has expressed optimism regarding the future performance of IndusInd Bank, suggesting a gradual but sustained recovery is likely. His assessment, shared in an interview with *Business Today*, draws parallels to the turnaround witnessed by Yes Bank and highlights specific factors contributing to IndusInd’s potential for re-rating within the Indian banking sector. Kant's perspective isn't solely based on current performance; it incorporates a broader understanding of the bank's strengths, management strategies, and the evolving macroeconomic landscape.

The core of Kant’s argument rests on the observation that IndusInd Bank has demonstrated resilience despite facing headwinds in recent years. While acknowledging past challenges related to asset quality concerns stemming from exposure to certain sectors like vehicle finance, he emphasizes that these issues are being actively addressed and managed under a more focused and proactive leadership team. The bank's current management, according to Kant, is demonstrating a commitment to prudent risk management practices and a clear strategy for sustainable growth. This contrasts with the period when concerns initially arose, suggesting a significant shift in operational approach.

A key element of Kant’s bullish outlook is the comparison to Yes Bank’s remarkable turnaround. Several years ago, Yes Bank faced a severe crisis involving governance issues, asset quality deterioration, and a loss of investor confidence. The bank required a rescue package orchestrated by the Reserve Bank of India (RBI) and subsequent investment from various stakeholders. However, under new leadership and with significant restructuring efforts, Yes Bank has not only stabilized but also demonstrated impressive growth in recent periods. Kant believes IndusInd Bank shares similar characteristics that could facilitate a comparable recovery trajectory. Both banks, he argues, possess strong underlying fundamentals – a robust franchise, a loyal customer base, and a potential for higher profitability once the current challenges are effectively navigated.

The comparison isn't meant to imply an identical path forward; rather, it highlights the possibility of overcoming significant adversity through decisive action, strategic realignment, and consistent execution. Kant’s analysis suggests that the market may be currently undervaluing IndusInd Bank due to lingering concerns about asset quality, but these concerns are being systematically addressed. The lessons learned from Yes Bank's experience – particularly regarding the importance of strong governance, transparent communication, and proactive risk mitigation – appear to be informing IndusInd’s current strategy.

Kant further elaborates on specific areas where IndusInd Bank is showing signs of improvement. He points to a strengthening retail franchise as a crucial driver of future growth. The bank has been actively expanding its reach in the retail segment, focusing on building deeper relationships with customers and offering tailored financial solutions. This emphasis on retail banking aligns with the broader trend within the Indian financial sector, where retail lending is considered a more stable and sustainable source of income compared to corporate or wholesale lending. The shift towards retail also inherently diversifies risk, reducing dependence on specific sectors that might be vulnerable to economic fluctuations.

Furthermore, Kant highlights IndusInd Bank’s success in managing its non-performing assets (NPAs). While acknowledging the past issues, he notes a concerted effort to identify and resolve problem accounts, coupled with stricter underwriting standards for new loans. This proactive approach is contributing to a gradual improvement in asset quality metrics, which should eventually alleviate investor concerns and lead to a re-rating of the stock. The bank’s focus on early warning signals and prompt corrective action are key components of this strategy.

Beyond asset quality management and retail expansion, Kant emphasizes the importance of technology adoption for IndusInd Bank's future success. The banking sector is undergoing a rapid digital transformation, and banks that can effectively leverage technology to enhance customer experience, streamline operations, and improve risk management will be best positioned to thrive. Kant believes IndusInd Bank recognizes this imperative and is investing in digital infrastructure and innovative solutions to remain competitive. This includes exploring opportunities in areas like mobile banking, online payments, and data analytics.

Looking ahead, Kant anticipates that the re-rating of IndusInd Bank will be driven by several factors. Firstly, a continued improvement in asset quality metrics will build investor confidence. Secondly, sustained growth in retail lending will demonstrate the bank’s ability to generate stable and predictable income. Thirdly, successful implementation of digital transformation initiatives will enhance operational efficiency and customer satisfaction. Finally, a favorable macroeconomic environment – characterized by robust economic growth and low inflation – will support overall banking sector performance.

Kant also positions IndusInd Bank within his broader list of preferred defensive picks in the Indian market. Defensive stocks are those that tend to perform relatively well even during periods of economic uncertainty or market volatility. He believes IndusInd’s strong franchise, improving asset quality, and focus on retail lending make it a compelling investment option for risk-averse investors seeking stability and long-term growth potential. The bank's ability to navigate challenging environments and maintain profitability is a key characteristic that aligns with the definition of a defensive stock.

In conclusion, Dharmesh Kant’s assessment paints a picture of IndusInd Bank on the cusp of a gradual recovery. Drawing parallels to the Yes Bank turnaround and highlighting specific strengths within the bank – including its retail franchise, asset quality management efforts, and commitment to digital transformation – he suggests that the market may be overlooking the bank's potential for re-rating. While acknowledging past challenges, Kant’s perspective is ultimately optimistic, emphasizing the importance of proactive risk management, strategic realignment, and consistent execution in driving sustainable growth and restoring investor confidence. The comparison to Yes Bank serves as a powerful reminder that even banks facing significant adversity can emerge stronger through decisive action and a clear vision for the future.









Read the Full Business Today Article at:
[ https://www.businesstoday.in/markets/stocks/story/indusind-bank-to-see-gradual-recovery-says-dharmesh-kant-cites-yes-bank-turnaround-shares-top-re-defence-picks-487819-2025-08-05 ]