Private lender IndusInd Bank is likly to miss out on an inclusion in the upcoming review of global index provider MSCI, scheduled in May.

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As per the bank's updated shareholding pattern for March, the FPI headroom stands at 14.19 percent, which is marginally below the minimum inclusion requirement of 15 percent.

Foreign Portfolio Investors held a total of 63.5 percent in IndusInd Bank as of March 2023. This also includes the promoter holding of 15.15 percent as they are also categorized as FPIs. According to IIFL Alternative Strategy, NRI holdings of 0.6 percent does not elaborate its nature as to whether it is repatriable or non-repatriable. Hence, MSCI could consider that as part of foreign investment as well.

Taking all these factors into consideration, the total FPI holding in IndusInd Bank comes up to 63.5 percent.

Foreign investors can own up to 74 percent stake in IndusInd Bank.

Therefore, the headroom for FPIs comes up to 10.5, which is the difference of the current holding (63.5) from the cap (74). In percentage terms, this comes up to 14.19 percent. Headroom generally refers to a gap between upper cap and the current holding.

IndusInd Bank's promoters have been looking to increase their stake in the lender. As per CNBC-TV18 reports of February this year, promoter Indusind International Holdings Ltd (IIHL), Mauritius has been looking to submit an application to RBI to increase its stake up to 26 percent. This comes on the bank of RBI’s revised guidelines of 2021 which allows promoters to own up to 26 percent of a bank.

Shares of IndusInd Bank have underperformed the index and most of its peers so far this year. The stock is down 13.3 percent year-to-date, compared to a 4 percent drop in the Nifty Bank index. Most analysts though, remain positive on the stock, with price targets ranging from Rs 1,100 to Rs 1,700.

Also Read: Kotak Mahindra Bank shares rise on potential MSCI weightage inclusion, likely inflows

(Edited by : Hormaz Fatakia)

First Published:Apr 12, 2023 9:53 AM IST