Deven Choksey’s Key Advice for IndusInd Bank : Questions Defence Stock Valuations

Business Today reported a statement from Deven Choksey, MD at DR Choksey FinServ Pvt, who pointed out two instant and important actions for crisis-hit IndusInd Bank Ltd to restore 'normalcy'. “Little disturbing to note a few things that whatever the available reserves they have carried in the books, most of it has been wiped off. Unless they recapitalise themselves, I don't think the bank is registering a significantly bigger case for returning to normalcy. You could always write off the loss and clean the balance sheet but the first big step would be to infuse more capital into. And, the second next step would be to tighten the management controls.”

Mr. Deven Choksey also stated that “This is where probably this bank has to do a lot of work. Till such a point this entire exercise gets over, I don't think that it's easy for anyone to buy into banks like IndusInd immediately. I would rather like to see how progressively they're taking corrective steps and measures, including changing the management and then possibly taking a call on this particular subject”

IndusInd Bank reported its first earnings following the discovery of accounting discrepancies, posting a consolidated net loss of Rs 2,328.92 crore in the fourth quarter of FY 2024-25 (Q4 FY25), compared to a net profit of Rs 2,349 crore in the same period last year. Net Interest Income (NII) stood at Rs 3,048.3 crore for the March 2025 quarter, while provisions surged to Rs 2,522.08 crore. The bank's gross Non-Performing Assets (NPA) also increased to 3.13% in Q4 FY25, up from 2.25% in the December 2024 quarter.

Choksey also shared his views on defence stocks and said, the valuations are expensive. If you make valuations expensive and discount the companies for FY 27-28 now when you are in FY 25-26, it implies that you are not willing to accept the fact that there is an element of risk involved in their business.

He later added that “The Indian market is currently experiencing a slightly euphoric mood, which is leading to some valuation oversights. In my view, many defence counter companies may look to capitalize on their market capitalizations, possible through new share placements at higher valuations. However, we should be cautious as these valuations aren’t backed by immediate business growth.”