We downgrade IIB to ‘HOLD’ from ‘BUY’ as we cut multiple to 1.0x from 1.4x driven by uncertainties relating to earnings quality and future leadership. Woes continue for IIB since an irregularity was unearthed in derivative accounting. This discrepancy spanned across a 5-7yr period till 31st Mar’24, however, due to an RBI directive, there are no irregularities w.e.f. 1st Apr’24. Impact on Q4FY25 PAT may be Rs15.8bn post-tax or Rs21bn pre-tax which could be split into interest expense and treasury suggesting a cut of ~25% in FY25 PAT and a CET-1 hit of 37bps to 14.8%. In our view, this episode had a bearing on RBI’s decision to extend MD&CEO’’s tenure only for 1yr. Valuation is 0.9x on FY27 ABV and we trim TP to Rs1,000 fromRs1,400. For all recommendations report, click here.