Shares of HDFC Bank ended over 1% lower on the BSE at Rs 2091 levels, after the country’s largest private sector lender said its deputy managing director, Paresh Sukthankar, has tendered his resignation. The announcement came in on Friday after market hours. The stock had hit opened 2% lower at Rs 2,075 on the BSE on Monday.
Analysts had expected the stock to see a knee-jerk reaction to the development and most had suggested 'buy on dips' strategy from a long-term perspective. The exit, though a short-term sentiment dampener, is unlikely to have a lasting impact on the bank's performance, they said.
"HDFC Bank is widely recognised as one of India Inc's best repositories of corporate governance, robust processes, deep depth of talent, consistency of performance over many economic cycles and deep commitment towards stakeholder value creation. Mr. Sukhtankar's contribution in this journey of the Bank since its inception is seminal but the robustness of processes and deep reservoir of talent at various levels within the ranks will ensure that there will be no adverse impact whatsoever on the share price due to this change," said Ajay Bodke, CEO - PMS, Prabhudas Lilladher.
According to reports, Sukthankar was seen as a successor to Aditya Puri, the banks’ current managing director and chief executive officer, whose term concludes in October 2020. Analysts at Macquarie believe Sukthankar's sudden resignation throws a spanner in the works.
"HDFC Bank is not new to attrition and several top management personnel have left in the past five years to join competitors but that hasn’t affected the performance of the bank which goes to show it is a very system driven bank. Growth and asset quality continues to be stable. There are clear cut leadership transition responsibilities defined and usually replacement happens very seamlessly. While at the margin this development is negative, we are confident that HDFC Bank can manage this challenge well," writes Suresh Ganapathy, an analyst at Macquarie in a report. He maintains an outperformer rating on HDFC Bank.
At 09:18 am; shares of HDFC Bank has recovered marginally from its opening levels and trading 1% lower at Rs 2,091 on the BSE. On comparison, the S&P BSE Sensex was down 0.66% or 250 points at 37,619.