Explainer: Will IndusInd share price recover after its worst quarterly performance?

For the past few trading sessions, banking stocks have been making a killing on the Indian stock market. However, among the major benchmark stocks, one lender has been getting the short end of the stick—IndusInd Bank.

Following IndusInd Bank posting ₹2,239 crore in losses for the March quarter—its worst-ever performance—shares of the lender tumbled by 5.89 per cent to as low as ₹725.65 apiece on the BSE. It later gained some ground, rising by a little over 2 per cent.

Financial accounting in derivatives became the Achilles Heel for the bank, after it announced back in March that it took note of major irregularities. Further disclosures and actions led to a bear run for the past two months. CEO Sumant Kathpalia and deputy CEO Arun Khurana exited in quick succession.

Also Read | IndusInd Bank's MD and CEO Sumant Kathpalia resigns amid derivatives accounting lapses

The lender, in time, uncovered irregularities of ₹5,014 crore—mostly in its microfinance book. This included Incorrectly classified stress of ₹1,800 crore reported as gross non-performing asset, among others.

Back in March, it flagged ₹1,960 crore in losses due to incorrect categorisation of derivative trades, ₹674 crore in cumulative interest income reversal from accounting lapses, and ₹172 crore in flagged fraud, where certain employees misclassified assets and liabilities, leading to ‘cooked books’.

While the initial selloff in the market on Thursday might be attributed to the shock factor attached to dismal quarterly performance, further recovery could mean that the actions by the Sunil Mehta-led interim management were appreciated. According to the interim management, all issues have been disclosed to shareholders, after identifying and addressing them.

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