HDFC Bank Stock Rating Reaffirmed as 'Buy', Brokerages Predict Up to 55% Upside Amid Governance Concerns Lifting

HDFC Bank Stock: Brokerages Retain Bullish Ratings Amid Governance Concerns

HDFC Bank (HDFC Bank) has seen its share price fall 5.1 percent on Thursday to close at Rs 800, following a sharp selloff triggered by the resignation of part-time chairman Atanu Chakraborty. Despite this decline, brokerages Jefferies and Motilal Oswal Financial Services have maintained their bullish ratings on the stock, with share price targets implying potential upside of up to 55 percent.

Jefferies has maintained its 'buy' rating on HDFC Bank stock with a share price target of Rs 1,240, reflecting an expected upside of about 55 percent from the previous close. The brokerage noted that the management and board interaction following Chakraborty's resignation indicated that corporate governance at the bank is "not compromised". The swift appointment of Keki Mistry as interim chairman for three months is seen as providing continuity and easing investor concerns.

Motilal Oswal Financial Services also reiterated its 'buy' rating on the stock with a target price of Rs 1,100, implying a potential upside of 38 percent. The brokerage highlighted that both the bank and the regulator have stated that there were no governance, operational or regulatory issues flagged prior to the resignation. The Reserve Bank of India's (RBI) endorsement of the bank's governance record is seen as a positive development.

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Key Developments

• HDFC Bank stock has underperformed, declining 9.5 percent over the past year compared with a 0.8 percent fall in the Nifty 50.
• The bank continues to operate with strong capitalisation, liquidity and business momentum.

Outlook

While the regulatory reassurance and management commentary have helped assuage concerns, investor confidence is expected to be restored once there is clarity on the appointment of a permanent chairman and the upcoming CEO succession process.

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