HDFC Bank shares gain 3% as CEO Jagdishan rejects new term; Morgan Stanley, Jefferies, others weigh in

Shares of HDFC Bank gained 2.7% to their day's high of Rs 739.50 on the BSE on Monday after a host of brokerages retained bullish calls on the stock after Managing Director and CEO Sashidhar Jagdishan decided not to seek another term at the helm of the country's largest private lender.

Jagdishan's current tenure ends on October 26, 2026.

The bank said in an exchange filing over the weekend that its board had tried to persuade Jagdishan to continue, but he remained firm on his decision not to seek re-appointment. HDFC Bank's board has now decided to accelerate the process of identifying his successor, well within the timeframe stipulated by the regulator.


Among the names being considered internally is current Deputy Managing Director Kaizad Bharucha, who has been with HDFC Bank's board since 2014 and became Deputy MD in April 2023. However, the 15-year cap set by the Reserve Bank of India on the tenure of a Whole-Time Director at a private bank presents a limitation. Bharucha's current term on the board runs until 2029.

Also read: HDFC Bank eyes revival after peer outperformance

What are analysts saying?

Bernstein has maintained its ‘Outperform’ rating on HDFC Bank with a target price of Rs 1,150, implying a 60% upside from current levels. The brokerage said the development removes the feared scenario of an RBI-imposed short-term tenure and allows the incoming CEO to reset the narrative. It also noted that HDFC Bank has struggled to set and deliver on expectations.

Morgan Stanley has maintained its ‘Overweight’ rating on HDFC Bank with a target price of Rs 1,025, implying an upside of 42.3%. The brokerage sees Kaizad Bharucha and Jimmy Tata as the leading internal candidates for the CEO role and noted that the uncertainty around Jagdishan's reappointment had been a key overhang on the stock. HDFC Bank is down 28% year-to-date, compared with a 10% decline in the Sensex. While the bank missed on NIM in Q1 FY27, Morgan Stanley said fundamentals are gradually improving and believes the stock offers deep value relative to its fundamentals and historical levels.


Jefferies maintains ‘Buy’ rating but cuts target price to Rs 880 from Rs 1,050, an upside of 22% from the last close. Transition is likely to impact revenue momentum on deposit mobilisation and fees. So, we trim earnings for FY27-29 by 3% each,” the brokerage said in a note.

The brokerage does not see a risk to asset quality, noting that the bank has maintained high asset quality and that the book value of its exposure to the Essel group was nil at the time of the merger. The claim includes both principal and interest. However, Jefferies said the uncertainty could raise the cost of equity and weigh on the bank's valuation. It has therefore based its revised target on 1.6x September 2028 adjusted price-to-book value. Jefferies said that valuations at 1.5x one-year forward price-to-book and 12x PE are not as demanding.

Nomura has maintained its ‘Buy’ rating on HDFC Bank with a target price of Rs 950, implying an upside of 32%. The brokerage expects the stock to remain range-bound until there is greater clarity on the leadership transition. HDFC Bank shares are down roughly 27% in 2026, compared with an 8% decline in the NIFTY50, and are trading near a 52-week low.

While Nomura views Jagdishan's decision as incrementally positive as it removes one binary uncertainty, it believes clarity on the successor could take time, potentially extending into 2027F, leaving the leadership overhang in place in the near term. However, the brokerage believes the appointment of a credible successor could emerge as a meaningful rerating catalyst. In its view, one overhang has now closed, with the market waiting to see who will lead HDFC Bank into its next phase.

Nuvama has maintained its ‘Buy’ rating on HDFC Bank, while cutting its target price to Rs 875 from Rs 1,025, implying an upside of 21.5%. The brokerage said the CEO exit could pave the way for a credible successor, with recent lapses and governance scrutiny likely making an RBI term extension beyond October 2026 difficult.

It sees Sashidhar Jagdishan's resignation as a cleaner and more dignified exit, while the extended timeline gives the board more time to identify and groom a successor. Nuvama sees Kaizad Bharucha as a potential transition candidate for around two years and believes the CEO exit does not fundamentally impair HDFC Bank's strong franchise or its recovery story following the e-HDFC Ltd merger.

Read more: HDFC Bank weighing deputy MD Bharucha, outsider for CEO: Report

HDFC Bank under Sashidhar Jagdishan

Jagdishan took over as HDFC Bank's MD and CEO on October 27, 2020, succeeding Aditya Puri, who retired on October 26, 2020, after heading the bank for more than two decades. Jagdishan's first three-year term, approved by the RBI, started on October 27, 2020. He was subsequently reappointed for a second three-year term beginning October 27, 2023, which will end on October 26, 2026.

With Jagdishan's exit now set for the end of October, investor attention will turn to the choice of his successor and the bank's growth trajectory. Key areas of focus include HDFC Bank's ability to improve deposit mobilisation, restore margins and manage its balance sheet following the merger with HDFC Ltd, while delivering stronger growth.

HDFC Bank stock performance

The stock has remained under pressure this year. HDFC Bank shares have fallen 27.33% on a year-to-date basis and are down 24.80% over the past one year, according to NSE data. Over a five-year period, the stock has declined nearly 6.97%.

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