Mumbai, September 1: Global brokerage HSBC has downgraded India’s largest private lender, HDFC Bank Limited, to Hold from Buy. With this, the brokerage significantly slashed its price target from ₹990 to ₹830, becoming the first major research house to downgrade the bank after Managing Director & CEO Sashidhar Jagdishan declined reappointment when his term concludes on October 26, 2026.
In a research note, HSBC said that the stock’s historial valuation discount is unlikely to reverse even if a new CEO takes the helm. With challenges like sluggish loan growth, margin compression and a low cost deposit base, the new CEO would face a barrage of challenges to deal with.
“We do not believe a mean reversion would happen just because valuations are attractive. History has no standing if the fundamental performance does not improve. Any new CEO will not have it easy, and will still have to fix loan growth, margins, and return on assets while contending with legacy issues at the same time.” HSBC equity analysts stated.
Though HDFC Bank has said it would fast track the process for selecting and appointing Jagdishan’s successor, the time is running out for the company. Though Deputy Managing Director Kaizad Bharucha remains a favorite choice, other names being discussed include Anup Bagchi of ICICI Prudential Life, former HDFC Bank MD Paresh Sukhankar and Axis Bank CEO Amitabh Chaudhry.
The bank’s stock is down by about 26-28% on a year to date basis, with the transformational merger with its subsidiary HDFC Ltd also affecting the bank as well.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investing in stocks includes financial risks, and past performance is not indicative of future results. Readers should conduct their own research or consult with a qualified financial advisor before making any investment decisions.
