HDFC Bank gets 'buy' rating, brokerages see 55% upside
What's the story
HDFC Bank's stock has remained a hot topic among brokerages, with several maintaining their bullish stance even after the sudden resignation of part-time chairman Atanu Chakraborty. Jefferies and Motilal Oswal Financial Services have both rated HDFC Bank shares as 'buy,' predicting an upside potential of up to 55%. This comes despite a sharp selloff in the bank's shares following Chakraborty's exit over "values and ethics."
Market response
HDFC Bank shares fell over 5% on Thursday
After Chakraborty's departure, HDFC Bank's shares fell 5.1% on Thursday to close at ₹800. The decline was as steep as 8.7% during the day, marking its biggest fall in over two years. In spite of this market reaction, global brokerage Jefferies has maintained a 'buy' rating on HDFC Bank stock with a target price of ₹1,240—implying an upside of about 55% from the previous close.
Governance assurance
Jefferies sees no compromise in corporate governance
Jefferies's report on HDFC Bank stock noted that management and board interactions after Chakraborty's exit showed "minor issues" but no compromise in corporate governance. The brokerage also emphasized the appointment of Keki Mistry as interim chairman for three months, which provides continuity and should help ease investor concerns.
Market stability
Motilal Oswal raises target price to ₹1,100
Motilal Oswal Financial Services has also reiterated its 'buy' rating on HDFC Bank stock with a target price of ₹1,100—implying a potential upside of 38%. The brokerage said that both the bank and regulator have clearly stated there were no governance, operational or regulatory issues flagged prior to Chakraborty's resignation. The RBI has also endorsed the bank's governance record, stating there are "no material concerns on record."
Leadership stability
Swift appointment of interim chairman reinforces brokerage's confidence
Motilal Oswal highlighted the swift appointment of Mistry as interim chairman and close engagement between the board and regulator as signs of stability in leadership and oversight. The brokerage also noted Mistry's own remarks that he would not have accepted the role unless the institution's systems and ethical framework aligned with his principles, which further reinforces confidence in governance standards.