Mutual fund holdings in IndusInd Bank have suffered a significant erosion of over Rs 6,000 crore after the stock tumbled 20% on March 11. The sharp decline followed the bank’s disclosure of a 2.4% impact on its net worth due to changes in the valuation of derivative transactions.
As of February, 35 mutual funds collectively held over 20.88 crore shares of IndusInd Bank, according to Ace Equities. The value of these holdings stood at Rs 20,670 crore but has now declined to Rs 14,600 crore after the recent stock correction.
ICICI Prudential MF holds the largest stake, valued at Rs 3,779 crore, followed by HDFC MF at Rs 3,564 crore and SBI MF at Rs 3,048 crore. Other major holders include UTI, Nippon India, Bandhan, and Franklin Templeton MFs, with investments ranging from Rs 740 crore to Rs 2,447 crore.
Between April 2024 and January 2025, IndusInd Bank received mutual fund inflows worth Rs 10,200 crore. However, February 2025 saw an outflow of approximately Rs 1,600 crore, as per Ace Equities data. The stock has witnessed a steep correction, declining over 54% from its April 2024 peak of Rs 1,576 per share.
The 2.4 percent impact on net worth could translate into a potential profit reduction of around Rs 1,500 crore in Q4 FY25, according to a Moneycontrol report. While the financial impact remains relatively minor, analysts emphasise that the bigger concern is credibility, which may take several quarters to restore. To address these concerns, the bank has engaged an independent external agency to review and validate its internal findings.
In a recent note, Kotak cautioned against further negative developments, highlighting the bank’s significant underperformance. The report stressed the importance of the board’s response in assessing the situation and implementing safeguards to prevent similar occurrences.
However, on a positive note, Kotak suggested that an improvement in financials—particularly in asset quality within the microfinance portfolio—could help alleviate investor concerns. Additionally, sustained deposit growth and adequate liquidity could eventually reframe this event as a one-time misstep rather than a lasting issue.
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