Macquarie sees room for 44% upside in HDFC Bank shares; check out target price

HDFC Bank traded flat in Tuesday's session (March 19) after the senior management personnel- Arvind Kapil,  Group Head Retail Assets - Home Loans, HDFC Bank tendered his resignation, to pursue an alternative opportunity.

The release by the lender stated that we wish to inform you that Mr. Arvind Kapil, Group Head Retail Assets - Home Loans, HDFC BankLimited (“Bank”), who is an employee within the category of Senior Management of the Bank, has, on March 18, 2024, formally expressed his intention to resign, to pursue alternative opportunity, and the same has been accepted by the Bank.

Since its Q3 results were announced on January 16, 2024, shares of the country's largest private lender are trading in a rangebound fashion and have drifted lower by 14 per cent.

Here's how brokerages view the development at HDFC Bank.

Jefferies has continued with its buy stance on the counter with a target of Rs 1800. The brokerage noted that the senior management exit is a negative and smooth transition will be key.
The brokerage further added that the bank's Head of Mortgages, Arvind Kapil, has resigned to take charge as  MD & CEO of Poonawalla Fincorp from June 2024. This is a tad negative given his seniority, some recent exits at HDFC Bank to join Bandhan Bank & risk of attrition of teams. Also, the brokerage mentioned that the bank's strong talent base is a comfort. Additionally, it noted that it may be sentimentally negative for Bajaj Finance as it is Poonawalla's larger peer.

Nomura on the other hand retains its neutral call on the private lender and says it maintains a neutral stance with a target of Rs 1625. The bank has a significant depth in senior management, which it has demonstrated in the past as well. The global brokerage does not expect any material impact on business owing to this change in senior management. Nonetheless, it believes that any similar churn at the senior management level over the near to medium term will be key monitorable.

Macquarie maintains an outperform view with the highest target of Rs 2075, signifying potential run-up of 44 per cent.