HDFC Bank Share Price Target: HDFC Bank shares have been subject to intense selling pressure over the past few sessions, following an abrupt resignation by its chairman Atanu Chakraborty, "citing ethical concerns". This was the first time that a part-time chairman of HDFC Bank left mid-way, raising concerns over the bank's functioning.
Post his resignation, HDFC Bank shares crashed nearly 8 per cent in just three sessions. The heavy selling also impacted HDFC Bank's valuation as its market cap declined by Rs 56,124.48 crore to Rs 12,01,267.28 crore.
ICICI Securities, in a report, released after Atanu's resignation, said that GDFC Bank's track record and historically low valuations provide comfort. The brokerage has maintained a BUY rating on HDFC Bank shares.
"Maintain BUY given the bank’s superior track record, conservative risk practices and historically low valuations," ICICI Securities said.
HDFC Bank Share Price Target
ICICI Securities has set a target price of Rs 1,120 on HDFC Bank shares.
The target price implies an upside of more than 40 per cent from Friday's (March 20) closing of Rs 781.
HDFC Bank Chairman Resignation: What ICICI Securities Said
According to ICICI Securities, the abrupt resignation of the part-time chairman, along with his adverse remarks regarding ‘practices within the bank against his personal values and ethics,’ is serious and a bit difficult to comprehend.
The timing of the resignation is also unfortunate as, in the recent past, the bank has witnessed multiple senior management exits/ superannuation and adverse regulatory actions against its Dubai branch.
On the investors’ call, the brokerage said that HDFC Bank stated that the outgoing chairman did not share the specifics regarding the points raised, despite being asked. It emphasised that there is no apparent power struggle between Board members or within executive management, suggesting instead that the issues may stem from personal relationship friction between the outgoing chairman and executives.
The brokerage said that it takes "comfort" from the regulatory assurance on HDFC Bank’s governance and financial position. Besides, the bank also assured of no operational issues.
"Importantly, we find the RBI statement on the matter assuring. We believe the cohesiveness of the Board and management is critical. We concur with management that the issue appears to be more interpersonal," ICICI Securities said.
HDFC Bank is India's second most valuable listed company. It is also second largest bank in terms of branches and customers after the State Bank of India (SBI).
