Nomura Lifts Mood on Dalal Street with Surprise IndusInd Bank Upgrade

In a move that turned heads on the Street, Japanese brokerage firm Nomura on Wednesday gave IndusInd Bank a big thumbs up. The firm upgraded the stock’s rating and sharply raised its price target, hinting at a possible 30% upside. Investors responded quickly—IndusInd’s shares surged nearly 5% by afternoon trade, briefly touching ₹855.50 on the BSE.

This upgrade wasn’t just a routine tweak—it marked a clear shift in sentiment toward a bank that’s been under a bit of a cloud lately.

What’s Behind Nomura’s Confidence?

Cleaning House: A Fresh Start

Nomura’s optimism seems rooted in recent changes at the bank. IndusInd has taken steps to clear out lingering issues from the past, including a massive ₹5,300 crore in provisions. That’s a strong signal the bank is serious about turning a new page.

There’s also been a noticeable governance shake-up. Nomura sees the board changes and a planned leadership reset in FY26 as steps in the right direction. These kinds of structural changes tend to catch investor attention—and in this case, for good reason.

Regulatory Comfort Helps

The Reserve Bank of India hasn’t gone silent either. The regulator acknowledged the bank’s cleanup efforts, which Nomura believes could pave the way for approval of a promoter stake increase. That would ease governance concerns even further.

Financials Look Healthier

Nomura also pointed out the bank’s solid capital and liquidity metrics. With a CET-1 ratio around 15% and a liquidity coverage ratio of 118%, the balance sheet is looking sturdy. Plus, with net interest margins improving and credit costs falling, profitability is on an upward path.

They now expect the bank’s return on assets to rise to 1.1% and return on equity to hit double digits over the next couple of years. In simple terms—it’s looking leaner, stronger, and more profitable.

Investors React Swiftly

Markets don’t usually wait to digest good news. IndusInd Bank’s stock saw a spike of over 5% following Nomura’s announcement, with trading volumes shooting up significantly—more than double the average of the past 50 days. That’s a clear sign that the upgrade struck a chord with investors.

Interestingly, even with this rally, the stock is still trading well below its 52-week high of ₹1,550, leaving plenty of room for growth if the bank stays on track.

Not All Smooth Sailing Yet

While Nomura is optimistic, they’ve also cautioned about a couple of things. Any fresh negative surprises—especially related to the bank’s accounting or governance—could be a setback. And if the leadership transition planned for FY26 gets delayed, that could also spook investors.

Still, they noted similar past rebounds—like Yes Bank in 2018 or RBL Bank in 2021—as examples of what’s possible when banks clean up and reset properly.

Broader Market Vibes

IndusInd’s gains came on a day when Indian markets were largely upbeat. Despite global worries like rising oil prices and tensions in the Middle East, domestic buying and solid liquidity helped indices stay firm. That provided a supportive backdrop for IndusInd’s rally.

Interestingly, while most banking peers like SBI and Kotak Mahindra were flat or slightly down, IndusInd clearly stood out.

What This Means Going Forward

Nomura’s bullish view signals confidence in IndusInd’s turnaround story—but now it’s up to the bank to follow through. If leadership transitions smoothly and no more financial skeletons come out of the closet, the road to that ₹1,050 target may well be real.

Investors, regulators, and analysts will all be watching closely. For now, though, it’s a much-needed vote of confidence for a bank that’s been working hard to rebuild trust.