FPI holding in IndusInd bears upper limit

Mumbai: Overseas investors could soon be barred from buying fresh shares of IndusInd Bank as the private lender heads closer to the foreign investment limit. As on Wednesday, foreign portfolio investors (FPIs) held 73.6 per cent in the bank, which is 0.4 per cent below the maximum permissible foreign investment limit. This means these investors can buy up to 34 lakh shares of IndusInd Bank from local investors worth about 310 crore. According to the Reserve Bank of India rules, foreign investors cannot own more than 74 per cent in Indian banks.The bank was put on red flag list by depositories on November 4 and since then the FPI stake in IndusInd has gone up by over 2.5 per cent. Currently, IndusInd is the only other lender apart from HDFC Bank which features in the red-flag list. At present, 238 foreign funds have exposure to IndusInd Bank shares, shareholding data showed. US-based hedge fund Route One Investment owns 4.5 per cent stake in the company while others including BNP Paribas and UBS own more than 3.5 per cent stake each in the lender.79672243Since November, shares of IndusInd Bank have gained 56 per cent outperforming the 24 per cent rally in the Bank Nifty index, a gauge of banking stocks. The benchmark Nifty gained 15 per cent during the period.Foreign investors’ recent appetite for IndusInd shares is in stark contrast to their sentiment a few months ago. Between January and October 2020, the stock had lost 60 per cent of its value and is still down 38 per cent on a year to date basis, data showed.“Fundamentally, the shift has happened after the YES Bank fiasco. There were worries then that IndusInd would also see run on deposits, but there has been a good stabilisation on the deposit franchise since then,” said Suresh Ganapathy, head of financial services research at Macquarie. “It was also considered cheap, having underperformed significantly and it was also termed as value play.”Ganapathy said the stock could have more upside if the asset quality situation turns better.Analysts say the financials of IndusInd Bank have seen a sharp rebound on account of lower borrowing costs and higher liquidity in the system.

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