Macquarie drops HDFC Bank from ‘Marquee Buy’ after chairman's exit; flags governance concerns

Brokerage firm Macquarie Capital has removed HDFC Bank from its “Marquee Buy” list after the lender’s part-time chairman, Atanu Chakraborty, resigned, citing certain practices at the bank that he said were not aligned with his “personal values and ethics.”

Macquarie said governance concerns are likely to weigh on the stock in the near term as investors turn cautious.

“Near-term underperformance may persist. While fundamentals remain strong with healthy return on assets (RoA), governance concerns will weigh heavily on the stock at this point,” said Suresh Ganapathy, Head of Financial Services Research at Macquarie Capital. “Investors would seek greater comfort from the board. Additionally, uncertainty around Sashi’s reappointment could act as an overhang. Key risks include a slowdown in growth and any further governance issues.”


Also read: 'A buy-on-dips pick': Why HDFC Bank is getting backing from analysts despite management blip

Macquarie’s “Marquee Buy” list comprises industry leaders such as Tata Consultancy Services, Sun Pharmaceutical Industries, Mahindra & Mahindra, Trent, and Power Finance Corporation. HDFC Bank had earlier been included in this list, backed by its strong underwriting standards and potential for RoA expansion.

Atanu Chakraborty, part-time Chairman and independent director of the bank tendered his resignation with immediate effect, citing “Certain happenings and practices within the bank, that I have observed over the last two years, are not in congruence with my personal values and ethics”. He had been on the board since May 2021 and was on his second term.

In a call held early Thursday, the bank said it was not aware of the specific reasons behind Chakraborty’s resignation, adding that despite repeated queries, no detailed explanation was provided.

New chairman Keki Mistry indicated that the exit could stem from a relationship issue between the former chairman and the management—something analysts are interpreting as a possible power struggle. However, Mistry emphasised that there are no material concerns, specific instances, or operational issues. He added that regulators remain comfortable with the bank, noting regular onsite and offsite inspections, and highlighted that compliance, governance, and internal controls remain strong.

CEO Sashidhar Jagdishan also clarified that there are no differences with Deputy Managing Director Kaizad Bharucha, stating that both are aligned on the bank’s strategic objectives and reaffirming Bharucha’s commitment to the organisation.

The Nomination and Remuneration Committee (NRC) is expected to take a call on Jagdishan’s reappointment as CEO, with his current term set to end in October 2026.

Also read: Rs 1 lakh crore wiped off! HDFC Bank shares slump 9%, set to record worst day since Covid crash

The removal of HDFC Bank from the “Marquee Buy” list by Macquarie Capital indicates that the stock is no longer viewed as a top-conviction idea, as such lists typically comprise a brokerage’s highest-confidence bets expected to outperform.

Macquarie’s stance suggests that near-term risks, particularly governance concerns and leadership uncertainties, including the CEO’s reappointment, could outweigh the bank’s strong fundamentals. As a result, the move may make investors more cautious, potentially exert short-term pressure on the stock price, and raise questions around management stability.

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