Bagchi will succeed Sashidhar Jagdishan, whose term will end on October 26. He has already been appointed as an Additional Director on the board from October 2. Bagchi’s appointment will be for a three-year term.
An ICICI Group veteran with over three decades of experience, Bagchi is currently the outgoing MD & CEO at ICICI Prudential Life Insurance.
The appointment finally puts an end to the speculation about the succession uncertainty at HDFC Bank after Sashidhar Jagdishan had announced that he will not be seeking re-appointment as MD & CEO once his term ends at the end of this month.
This is also confirmation of CNBC-TV18’s newsbreaks about Bagchi being in the fray for taking over the rein at the Mumbai-based private lender.
Also Read: HDFC Bank leadership transition: From Aditya Puri’s exit to Anup Bagchi — a timeline
In response to the announcement, the US-listed shares of HDFC Bank or American Depository Receipts (ADRs), gained as much as 5.5% on Thursday before paring some of those gains to end 3% higher. The ADRs ended another 2.7% lower on to reverse all of Thursday’s gains. Indian equity markets were closed for a holiday on Friday.
HDFC Bank Discloses Q2 Business Metrics
HDFC Bank also disclosed its provisional business updates for the September quarter, where its deposit growth continued to outpace its loan growth on a year-on-year basis.
Gross advances for the lender grew by 16.8% on a year-on-year basis, while deposit growth stood at 18.8% from last year. When compared to the June quarter, HDFC Bank’s loan growth stood at 5.2%.
Should You Buy Or Sell HDFC Bank Shares?
According to global investment bank Jefferies, Bagchi’s appointment provides clarity on succession and strategic direction.
It went on to add that opportunities from retail growth, fee cross-sell, and loan mix recalibration will contribute to HDFC Bank’s earnings and future re-rating.
Jefferies has a “buy” rating on HDFC Bank with a price target of ₹880.
Bernstein has among the highest targets on the street for HDFC Bank at ₹1,150 along with an “outperform” rating.
An external hire in the form of Bagchi could reset internal dynamics and investor expectations, Bernstein wrote in its note, adding that a three-year term provides runway for the futures.
Macquarie too has an “outperform” rating on HDFC Bank with a price target of ₹1,150. It wrote in its note that Bagchi’s experience is particularly relevant for a bank navigating demanding operational and strategic transition.
Shares of HDFC Bank ended 1.8% higher last Thursday at ₹721.2. The stock is down 27% so far this year.
Also Read: HDFC Bank gets a new CEO in Anup Bagchi – Can the share price get a new lease of life too?