IndusInd Bank share price was up 8 percent on BSE on June 11, looking to extend the gains into the fifith consescutive session.
Shares of the bank have reversed the course after huge losses recently on asset quality concerns.
Chandan Taparia, Derivative & Technical Analyst at Motilal Oswal Financial Services told that there is a technical trigger behind the rise in IndusInd shares. Looking at the monthly chart of the bank, we see it has given a narrow-range breakout because in the last two months it has not been able to surpass Rs 490-480 zone convincingly and the counter was beaten down.
Further 10-15 percent cannot be reduced on the higher side, which can take in to Rs 530-540 kind of levels. There should be a stop loss of Rs 475 for the next one or two weeks.
On June 10, in a presentation at Morgan Stanley investor conference, amidst the challenges posed by COVID-19, the bank showed it was on the path of growth.
With the relaxation in lockdown, the physical acquisition was returning to normalcy, the digital accquisition was scaled up, backed by targeted digital marketing and Video KYC launch.
The bank also said, its short-term market borrowings were at 10-12 percent . It expects the share of borrowings to remain range-bound.
The bank is creating provisions ahead of the NPA formation, the PCR has been raised from 53 percent to 63 percent in Q4FY20.
Promoters of IndusInd Bank likely to buy more stake
The company also said its promoters wanted to buy more stakes in the company.
Promoters of IndusInd Bank, IndusInd International Holdings and IndusInd Ltd, currently hold 14.68 percent of the paid-up share capital of the bank.
Promoters Hinduja Group applied to the regulator(RBI) to raise its stake in the bank to 26 percent from 14.68 percent.
According to the RBI norms, a bank needs to bring down its promoter shareholding to 40 percent in the first three years of operations. Followed by which the bank needs to bring down the promoter shareholding to 20 percent in 10 years and 15 percent in 15 years.
As per the RBI norms, for IndusInd Bank, the promoter equity holding in the bank is at 15 percent.
The rules say promoters can have only a 15 percent stake in the bank, IndusInd Bank’s optimism could be stemming from the RBI allowing Uday Kotak to hold a 26 percent stake in Kotak Mahindra Bank.
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