Shares of HDFC Bank tanked 5% on Thursday to Rs 799.70, a 21-month low, following the surprise exit of the Part-time Chairman Atanu Chakraborty who cited “practices” that were not in congruence with his ethics. Intra-day, the stock fell by 8.6%, with its market capitalisation eroding by Rs 66,570 crore. The scrip also marked its worst single-day loss since June 4, 2024 as well as the lowest closing level since June 14, 2024.
Suresh Ganapathy of Maquarie wrote in a note that the near-term underperformance may remain. “While fundamentals remain strong with good ROA, at this point in time, governance concerns will weigh down heavily on the stock.”
Ganapathy added that investors would want more comfort from the board. “Also, now the uncertainty surrounding Sashi’s reappointment will weigh down on the stock.” The brokerage has an ‘outperform’ rating on the stock with a target price of Rs 1,200, about 50% higher than the current market price. However, the stock has been removed from the ‘buy’ list.
Brokerages Flag Governance Overhang
Anuj Singla at JP Morgan observed that the stock is likely to “trade weakly” following Chakraborty’s resignation.”While the letter does not allege any specific misconduct, perception alone can weigh on the sentiment until credible steps are outlined and delivered,” Singla said.
At the current price, the HDFC Bank stock is valued at a price-to-book (PB) ratio of 2.18x, lower than the historical peak of 3-3.5x. The stock is now trading at a discount to its long-term averages and is relatively attractive compared to peers, Antu Eapen Thomas, research analyst at Geojit Investments, said. “The bank’s fundamentals remain strong, supported by superior asset quality, disciplined provisioning, and best in class operating efficiency, as reflected in a healthy cost to income ratio.”
Succession Uncertainty
Analysts remain cautious ahead of appointment of a CEO in October. “We need to have some clarity on the Sashidhar Jagdishan’s extension whose term ends in October 2026. This is important for some credibility and stability in the organisation,” Anand Dama of Emkay Global said.
According to data shared by prime MF database, 49 fund houses held 23.35% of the total share capital of the bank as of February 2026. The major holders of the stock include passive and active sectoral schemes investing in the banking sector and large-cap schemes.
On Thursday, the Reserve Bank of India described HDFC Bank as a systemically important lender “with sound financials, a professionally-run board and a competent management team.” The regulator said based on a periodic assessment, “there are no material concerns on record as regards its conduct or governance,” adding that the bank is well-capitalised and has sufficient liquidity.
