Shares of IndusInd Bank experienced a notable surge, rising nearly 6% on Wednesday, June 18, 2025. This increase in share price is attributed to a significant upgrade from global brokerage firm Nomura, who revised its rating on the stock to "buy" from "neutral." Along with the rating upgrade, Nomura also increased the target price for IndusInd Bank shares to ₹1,050 from a previous target of ₹700. This new target price suggests a potential upside of approximately 25% from the current trading levels.

Nomura's upgrade is underpinned by the belief that IndusInd Bank has addressed the majority of its legacy issues related to governance and accounting lapses that had plagued the bank in recent months. The brokerage firm anticipates that the bank's return on assets (RoA) will improve substantially, reaching 1% by the financial year 2027. This projection reflects confidence in the bank's ongoing recovery and strategic improvements. Furthermore, Nomura finds the current valuation of IndusInd Bank attractive, noting that the stock is trading at 0.9 times its one-year forward book value per share (BVPS).

In addition to improved financials and governance, Nomura highlighted the expected leadership change in fiscal year 2026 as a potential catalyst for a new direction at IndusInd Bank. The Reserve Bank of India (RBI) has also acknowledged the bank's remediation efforts, providing regulatory comfort to investors. Moreover, there is anticipation that the RBI might approve a promoter stake hike, which could alleviate concerns among shareholders and further stabilize the bank's ownership structure.

Nomura has also revised its earnings per share (EPS) estimates for IndusInd Bank upward by 14% to 16% for the financial years 2027 and 2028. This adjustment is based on expectations of higher net interest income (NII) and reduced credit costs. Under these revised projections, the bank's RoA is expected to range from 0.8% to 1.1%, with return on equity (RoE) projected between 7% and 10% for the period spanning FY26 to FY28.

The market has responded positively to Nomura's upgraded rating and revised financial projections, with the stock price reflecting increased investor confidence. The rise in IndusInd Bank's shares also occurred despite some mixed technical signals, with some analysts noting a mildly bearish trend based on moving averages and monthly indicators as of June 13, 2025. However, Nomura believes that IndusInd Bank's profitability outlook is stronger compared to some of its peers.

Over the past year, IndusInd Bank's stock had experienced a decline of approximately 43.51%. However, it has demonstrated signs of recovery in recent weeks, with an increase of around 8.63% over the past month. Looking at a longer-term perspective, the stock has delivered a gain of 76.11% over the last five years and has increased by a substantial 3,754.07% since its initial listing on the stock market.