Blog

After analyzing Indusind Bank’s conference call and management’s actions over the past year, I question whether the issue was merely an accounting discrepancy. Here’s why:

1. Delayed Disclosure

In September-October 2024, management detected discrepancies in their derivative book and hired an external agency to assess the impact. However, they disclosed this information only on March 10, 2025, citing uncertainty about the amount involved. This 6-month delay is unjustified, especially since they still can’t provide an exact figure. Here is what Sumanth Kathpalia said in the Concall “ …We started reviewing our internal trade book. And we observed some discrepancies in accounting of some of the trades, which was identified by September and October 2024. And then we hired the external agency to start reviewing our business. And that is why we are comfortable that by March end or April early, we should be able to identify the gap, and it seems to be in line with what we are saying, but we want to be sure about it because it’s still not validated completely right now….”

2. Insider Selling

Over the past year, insiders, including CEO Sumanth Kathpalia, continued to sell their holdings. This coincides with Foreign Institutional Investors (FIIs) reducing their stake from 42.47% to 24.74% between December 2023 and December 2024. These concurrent sales raise suspicions.

3. Audit Failures

Despite undergoing multiple audits (Concurrent, Statutory, RBI, and Revenue), none detected the discrepancies. This raises concerns about the effectiveness of these audits.

What Next ?

1. Audit Regulators’ Intervention: ICAI and NFRA should investigate the auditors’ failure to detect the discrepancies and seek clarifications.
2. SEBI Probe: SEBI should investigate the bank’s non-disclosure and the selling activities of FIIs and insiders.

Disclosure

• Research analyst or his associates or his relatives have no financial interest in the subject company.
• Research analyst or his associates or relatives, have no actual/beneficial ownership of one per cent or more securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance or research recommendation
• Research analyst or his associate or relatives has no connection or association of any sort with any issuer of products/ securities recommended herein.
• Research analyst or his associate or his relative has no actual or potential conflicts of interest arising from any connection to or association with any issuer of products/ securities, including any material information or facts that might compromise his objectivity or independence in the carrying on of research and recommendations services.
• Research analyst or his associates has not received any kind of remuneration or consideration form the products/ securities recommended herein.
• Research analyst or his associates have not received any compensation from the subject company in past 12 months.
• Research analyst or his associates have not managed or co-managed the public offering of Subject Company in past 12 months.
• Research analyst or his associates have not received any compensation for investment banking or merchant banking of brokerage services from the subject company in past 12 months.
• Research analyst or his associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve month
• Research analyst or his associates have not received any compensation or other benefhis from the subject company or third party in connection with the research report or research recommendations.
• Research analyst or his associates have not received any compensation for products or services from the subject company in past 12 months.
• The subject company is or was not a client of Research analyst or his associates during twelve months preceding the date of distribution of the research report and recommendation services provided.
• Research Analysts or his associates has not served as an officer, director or employee of the subject company.
• Research Analysts has not been engaged in market making activity of the subject company

Vinay Kumar Taparia

SEBI Registered Research Analyst
Registration No. INH000018276

Statutory Disclaimers:

“Investment in securities market are subject to market risks. Read all the related documents carefully before investing.

Registration granted by SEBI and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors”