IDBI Bank vs IndusInd Bank (2026): ROA, Capital, Recovery Risk & Which Is Better?

IDBI Bank vs IndusInd Bank: Q1 FY2027 scoreboard

Start with the metric that is hardest to fake: ROA

IDBI Bank earns approximately ₹1.89 for every ₹100 of assets on an annualised basis.

IndusInd earns roughly ₹0.78.

After adjusting IndusInd's Q1 for the income-tax-refund interest, underlying ROA was lower still.

For a bank comparison, this is far more informative than comparing absolute profits.

IndusInd has the larger balance sheet and more deposits, but IDBI currently extracts far more shareholder profit from each unit of banking assets.

IDBI's liability franchise is materially stronger

CASA:

43.64% versus IndusInd at 29.43%.

That fourteen-percentage-point difference is large.

IDBI has a much greater share of deposits sitting in relatively low-cost current and savings balances.

Its cost of deposits fell to approximately 4.59% in Q1 FY2027.

Cost of funds fell to around 4.68%.

IndusInd has been deliberately repairing its funding mix

Deposits grew 3.7% sequentially and 4.44% year on year.

Retail deposits have been improving as management reduces dependence on less-sticky funding sources.

But CASA fell to 29.43%.

That remains a structural disadvantage compared with IDBI.

Headline NIM makes the banks look almost identical

IDBI:

3.61%.

IndusInd:

3.57% reported.

A four-basis-point difference would normally be irrelevant.

But this is not a clean comparison.

IndusInd's reported NIM included a one-off tax-refund benefit

The bank received approximately ₹284 crore of interest on an income-tax refund.

Reported NIM therefore rose to 3.57%.

Excluding that benefit, normalized NIM was approximately 3.35%.

That changes the comparison materially.

IDBI's normalized margin advantage is closer to 26 basis points, not four.

The same adjustment matters for ROA

IndusInd's annualised Q1 ROA was around 0.78%.

Excluding tax-refund interest, underlying ROA was closer to roughly 0.63%.

Management is targeting approximately 1% quarterly ROA by the end of FY2027.

The target itself tells investors something important:

IndusInd management does not consider the current profitability level to be the destination.

IDBI is already well beyond IndusInd's immediate ROA milestone

IDBI's 1.89% is almost twice IndusInd's stated 1% exit target.

This does not automatically mean IDBI's stock must outperform.

A recovering bank can create large shareholder returns by moving from poor economics toward average economics.

But it means the investment cases are fundamentally different.

This distinction matters more than the headline PAT growth

IndusInd's consolidated PAT increased around 72% year on year.

But NII increased only 1%.

The profit increase was supported heavily by:

• lower provisions.
• lower operating expenses.
• a depressed comparison base.
• the tax-refund interest benefit.

This is a legitimate recovery.

It is not yet a high-quality revenue-compounding quarter.

IDBI's PAT growth is much slower—but the starting level is much stronger

IDBI profit increased only 5% year on year.

NII grew 10%.

That looks less exciting than IndusInd's headline growth.

But IDBI generated ₹2,115 crore of profit from a smaller deposit franchise.

The bank is growing from a much stronger profitability base.

This is the classic level-versus-direction problem

IDBI has the better level.

IndusInd has the sharper recovery direction.

Commercial stock analysis needs both.

A bank growing profit 70% from a weak base can still earn less attractive returns than a bank growing profit 5% from an already high-return base.

Asset quality gives IDBI one of the widest advantages in the comparison

GNPA:

IDBI 2.30%.

IndusInd 3.25%.

NNPA:

IDBI 0.16%.

IndusInd 0.95%.

The net-NPA difference is particularly significant.

IDBI has provisioned almost the entire recognised stressed book

Provision coverage is approximately 99.31%.

IndusInd's PCR is approximately 71.42%.

This does not mean IDBI cannot generate new NPAs.

It means old recognised bad loans have far less unprovided economic exposure remaining.

IndusInd's asset quality is moving in the right direction

GNPA fell from 3.43% sequentially to 3.25%.

NNPA improved from 1.00% to 0.95%.

Provisions declined to ₹1,384 crore.

Gross slippages also improved materially.

This is exactly what a turnaround needs.

It is simply not yet comparable with IDBI's current residual-risk profile.

The MFI and vehicle-finance books remain important for IndusInd

IndusInd historically built important franchises in vehicle finance and microfinance.

Those businesses can generate attractive yields.

They can also create elevated credit costs when borrower cash flows weaken.

Management is now deliberately diversifying the retail, SME and rural franchises and reducing dependence on unstable pockets.

The bank's governance history also changes the required proof standard

IndusInd's 2025 derivatives-accounting problem produced an impact of roughly $230 million and triggered a major leadership reset.

Rajiv Anand subsequently took over as MD & CEO.

The bank has since focused on:

• balance-sheet repair.
• governance controls.
• deposit franchise stability.
• credit-cost normalization.

Investors therefore need more than one profitable quarter before treating the old governance discount as fully resolved.

There are signs that external confidence is improving

In August 2026, CRISIL revised the outlook on IndusInd Bank's long-term debt instruments to Stable from Negative while reaffirming its ratings.

The rationale included:

• improved earnings profile.
• stabilising deposit franchise.
• greater share of granular deposits.
• strategic movement toward more stable asset segments.

This does not eliminate recovery risk, but it is an important independent signal that the balance-sheet repair is gaining credibility.

Capital is where IDBI's advantage becomes extraordinary

IDBI CRAR:

26.92%.

IndusInd:

17.15%.

Tier 1:

IDBI 26.38%.

IndusInd 16.10%.

Both are above regulatory requirements.

IDBI is in a completely different capital-surplus position.

What can IDBI do with that excess capital?

Potential uses include:

• supporting faster credit growth.
• absorbing ECL transition.
• funding strategic investment.
• allowing a future controlling shareholder to reshape the bank.
• supporting shareholder distributions over time.

The challenge is using capital productively rather than merely carrying it.

IDBI's 14.8% ROE needs to be interpreted alongside its enormous capital buffer

A bank with 26%+ Tier 1 capital is far less leveraged than a typical commercial bank.

That naturally suppresses ROE.

IDBI still generates approximately 14.8% ROE.

This makes the 1.89% ROA even more significant.

IndusInd's 6.26% ROE shows how much recovery remains

A commercial bank needs to earn a return on equity comfortably above its cost of equity over time.

At roughly 6%, IndusInd has not yet reached that state.

The immediate 1% ROA target is therefore only the first milestone.

A fully repaired bank eventually needs materially higher ROE as well.

Fairfax's existing CSB Bank ownership creates an additional regulatory issue

Fairfax already owns a significant stake in CSB Bank.

RBI rules do not normally permit one entity to operate two separate banking franchises indefinitely.

Reuters reported that solutions being discussed include:

• selling the CSB Bank stake.
• potentially consolidating the holdings.

These details remain part of an evolving transaction and should not be treated as finalized terms.

This makes IDBI very different from a normal high-ROA private-bank stock

Its future multiple depends partly on:

• standalone operating performance.
• sale completion probability.
• identity of the eventual owner.
• capital deployment after control changes.

The event premium can therefore move even if quarterly fundamentals remain unchanged.

IndusInd has no equivalent ownership event

Its catalyst is much more operational.

The bank needs to:

• restore year-on-year loan growth.
• increase granular deposits.
• improve core NIM.
• reduce credit cost.
• move ROA through 1%.

This makes IndusInd's catalyst slower but easier to measure through quarterly financial statements.

Valuation creates the most interesting contradiction

August 28, 2026:

• IDBI P/E: approximately 10.69x.
• IDBI P/B: approximately 1.59x.
• IndusInd P/E: approximately 58.50x.
• IndusInd P/B: approximately 1.17x.

At first glance those figures look incompatible.

They are not.

IndusInd's huge P/E is a denominator problem

Trailing earnings still contain the effects of its crisis period, depressed profitability and past losses.

That makes trailing P/E a weak measure of normalized value today.

Investors are effectively paying for a recovery that has not yet fully appeared in trailing EPS.

P/B is currently the cleaner IndusInd valuation lens.

IDBI's P/E is much more usable

IDBI's current trailing earnings reflect a profitable bank rather than a crisis-distorted base.

A roughly 10.7x P/E for a bank producing 1.89% ROA appears much more conventional.

The higher 1.59x P/B reflects the fact that each rupee of IDBI book equity currently earns substantially more than IndusInd book equity.

Does IndusInd's 1.17x book valuation already assume recovery?

To some extent, yes.

A bank earning only 6%-plus ROE would not normally deserve a premium to book if those returns were permanent.

The market is therefore implicitly assuming that:

• ROA rises.
• ROE rises.
• credit costs fall.
• governance concerns fade.

Part of the turnaround is already embedded in the multiple.

What would make IndusInd's P/B attractive?

The cleanest confirmation would be:

• ROA reaches 1% by the end of FY27.
• Core NIM recovers above 3.4%-3.5%.
• Year-on-year credit growth turns positive.
• GNPA continues moving toward 3% or lower.
• Credit cost moves materially lower.
• ROE moves toward double digits and beyond.

If those milestones arrive together, the current book multiple can become much easier to defend.

What would make IDBI's 1.59x book look reasonable?

IDBI needs to preserve:

• ROA around 1.7%-1.9%.
• NIM comfortably above 3.5%.
• NNPA near current levels.
• double-digit deposit growth.
• mid-to-high-teens or better credit growth.

and eventually demonstrate productive use of its huge capital surplus.

Bull Run's August 25 snapshot shows very different market narratives

The low Bull Run score on IndusInd reflects the fact that several trailing financial indicators still carry the impact of its recent crisis and recovery period.

That makes current-quarter trend analysis especially important.

IDBI's recent three-month momentum is more event-sensitive

Its approximately 20% three-month return overlaps with renewed progress in the strategic divestment process.

Investors should therefore avoid attributing all recent price movement to bank operating fundamentals.

IndusInd's strong one-year return tells us recovery expectations are already rising

The share price has recovered significantly from crisis-period lows.

This means the market no longer treats the bank as a pure distress situation.

Future rerating now requires operating proof rather than simply relief that the worst governance concerns are behind it.

IDBI Bank vs IndusInd Bank FAQs

Which bank has higher ROA?

IDBI Bank at 1.89% versus IndusInd Bank around 0.78% reported in Q1 FY2027.

Which has higher normalized NIM?

IDBI Bank. IDBI reported 3.61%; IndusInd's reported 3.57% included a tax-refund benefit and normalized to approximately 3.35%.

Which is growing loans faster?

IDBI Bank, with 22% year-on-year net-advance growth. IndusInd remained down about 2.2% year on year but grew approximately 3.3% sequentially.

Which has better CASA?

IDBI Bank at 43.64% versus IndusInd Bank at 29.43%.

Which has lower GNPA?

IDBI Bank at 2.30% versus IndusInd Bank at 3.25%.

Which has lower NNPA?

IDBI Bank at 0.16% versus IndusInd Bank at 0.95%.

Which has stronger capital?

IDBI Bank by a very wide margin, with 26.92% CRAR versus IndusInd at 17.15%.

Is IndusInd Bank recovering?

Yes, Q1 FY2027 showed sequential credit growth, better NPAs, lower provisions and improved ROA. But the bank has not yet restored year-on-year credit growth or reached its 1% ROA target.

Is IDBI Bank's sale complete?

No. The process remains advanced but pending final governmental, regulatory and transaction approvals as of August 31, 2026.

Which stock is cheaper?

IndusInd is cheaper on P/B, while IDBI is dramatically cheaper on current trailing earnings. IndusInd's P/E is currently distorted by weak crisis-period trailing profits.

Where can investors compare them on Bull Run?

Use the IDBI Bank stock page and IndusInd Bank stock page.

Research sources

• Bull Run — IDBI Bank
• Bull Run — IndusInd Bank
• IDBI Bank official FY2027 disclosures
• IDBI Bank official Q1 FY2027 press release
• IndusInd Bank official Q1 FY2027 results release
• Reuters — current IDBI strategic-sale status
• IDBI late-August valuation data
• IndusInd late-August valuation data