UBS Principal Capital buys Rs 197cr worth shares of IndusInd Bank

Singapore-based investment banking firm UBS Principal Capital Asia has acquired up 0.85 percent stake in private sector lender IndusInd Bank on April 7.

As per April 7 bulk deal data available on the National Stock Exchange, UBS has acquired 53,83,066 equity shares of the bank at Rs 367 per share.

The total deal value stood at Rs 197.55 crore and could be one of reasons for stellar rally in the stock price.

IndusInd Bank was the biggest gainer among Nifty stocks, rallying 22.56 percent to close at Rs 383.85 on the NSE.

The stock had fallen nearly 80 percent in the last three-month period, which was quite a big correction compared to Nifty Bank (down 46 percent), Nifty (down 34 percent) and Nifty Private Bank (down 49 percent), following concerns around asset quality and strength of funding franchise.

One of primary reasons was withdrawal of deposits from select private banks (including IndusInd Bank), especially after the Yes Bank fiasco.

The COVID-19 outbreak has further impacted growth/asset quality prospects in the select business segments.

Motilal Oswal estimates credit cost to remain elevated over the next few quarters while lowering its business growth assumptions. It has cut its price target on the counter to Rs 800/share while maintaining its buy call in a report dated March 31.

The IndusInd Bank management in its analyst call highlighted that it will make higher provisions towards some of the stressed accounts and guided to increase provision coverage to more than 60 percent by FY20.

It has introduced planning cycle-5 with strong focus on reducing deposit concentration and increasing granularity of liabilities through retail deposits. Also, focus will be on building a granular asset book.