HDFC Bank shares fall another 2%, down nearly 8% in two sessions. What are experts saying?

Shares of HDFC Bank, India’s largest private lender, slipped an additional 2% to their day's low of Rs 781 on the BSE on Friday after its American Depositary Receipts (ADRs) listed on the New York Stock Exchange (NYSE) dropped another 2%, signalling further weakness after the stock’s sharp 5% fall on Thursday, which briefly wiped out nearly Rs 1 lakh crore in investor wealth.

With today's decline, HDFC Bank share price has slipped 7.5% in 2 sessions.

The continued decline in ADRs reflects lingering concerns among investors following the sudden resignation of former chairman Atanu Chakraborty, even as the bank’s management and board have attempted to ease investor nerves.


On Thursday, the stock witnessed a massive selloff with market capitalisation erosion at one point reaching about Rs 1 lakh crore. The trigger for the selloff was Chakraborty’s resignation, in which he cited that certain “happenings and practices” within the bank over the past two years were not in line with his personal values and ethics.

The bank’s chief executive and managing director Sashidhar Jagdishan said the board had asked Chakraborty to reconsider his decision and clarify his concerns. He noted that “every board member” tried to persuade him to withdraw his resignation or provide more details, but he chose not to do so.

HDFC Bank moved swiftly and appointed Keki Mistry, former CEO of HDFC, as interim part-time chairman with approval from the Reserve Bank of India. Following the development, the lender organised a conference call.

Addressing analysts a day after the surprise exit, interim chairman Keki Mistry said there was "no power struggle within the bank" and stressed that the board had not witnessed any kind of complete difference in opinion in its meetings.

"None of us are aware of the issues raised by Chakraborty in [his] letter," Mistry said, adding that there had been no discussion with regards to governance within the board.

Mistry added that the lender’s leadership remained aligned, dismissing suggestions of internal discord. The management team does and will continue to work in a cohesive manner, he said, adding that there has been no discussion with regards to governance within the board.

Mistry added, "I would never remain on the board if there were any issues with governance," while asserting that the institution remained "very very strong on ethics."

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What are experts saying?

Despite the sharp reaction in the market, analysts are beginning to see the correction as a potential opportunity rather than a sign of deeper trouble.

Deven Choksey said the decline has pushed the stock into a “deep value” zone, although he acknowledged that valuations may now factor in a discount due to recent developments.

Ishan Tanna of Ashika Capital said the situation appears tactical rather than structural. He described the chairman’s resignation as a buy-on-dips opportunity, adding that the bank’s long track record of strong processes offers comfort.

Tanna also pointed to management commentary suggesting that the issue relates to differences in value systems rather than any regulatory or compliance concerns. He said it appears to be about differing perspectives, not linked to regulatory problems.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)