HDFC Bank gains 3%, extends rebound for second day; analyst says buy on dip

HDFC Bank's two-day rally follows a sharp 12 per cent decline over the previous three sessions, triggered by the abrupt resignation of Atanu Chakraborty, the non-executive chairman of HDFC Bank

HDFC Bank share price today: Shares of India's largest private lender, HDFC Bank, extended gains for a second consecutive session on Wednesday, March 25, rising over 3 per cent to hit an intraday high of ₹791.35 on the NSE. On Tuesday, the stock had gained 2.8 per cent to close at ₹764.90. In the last two sessions, the stock has surged over 6 per cent from a low of 744.15.  Around 11:15 AM, shares of HDFC Bank were trading at ₹791, up 3.4 per cent. In comparison, the benchmark NSE Nifty 50 was quoting at 23,431 levels, up by 518 points or 2.25 per cent. 

 

 

The two-day rally follows a sharp 12 per cent decline over the previous three sessions, triggered by the abrupt resignation of Atanu Chakraborty, the non-executive chairman of HDFC Bank, who said that certain “happenings and practices” at the bank were not in congruence with his values and ethics.

 

In a letter filed with the stock exchanges, HDFC Bank stated that Chakraborty's sudden exit, which had raised market concerns about governance, did not point to any events or practices at the bank that conflicted with his personal values.

 

“We wish to inform you that Mr. Chakraborty did not mention any happenings or practices that were not in congruence with his personal values and ethics,” the bank said.

 

Keki Mistry, a veteran of the HDFC Bank Group who assumed the role of interim chairman following Chakraborty’s resignation, said there may have been "relationship issues" between Chakraborty and the executive leadership, but found no "substantive" concerns behind the departure. He stressed that the bank’s operations and governance remain stable.

 

On March 24, the bank's board announced to appoint external law firms to review former part-time chairman Atanu Chakraborty's resignation letter. 

 

In an exchange filing, the bank said, “To reinforce the robust governance standards of the bank, the board of directors of the bank at its meeting, held on March 23, took a proactive step and approved the appointment of external law firms (domestic and international), to conduct a review regarding Mr. Chakraborty’s resignation letter”.

 

The said law firms have been advised to provide their report on the same within a reasonable period of time.

Here's what the analyst suggests:

Gaurav Sharma, head of research at Globe Capital Market, said that a committee has been formed and is yet to submit its report.

 

“I have high regard for HDFC Bank and its corporate governance. Keki Mistry recently shared his views, which is a positive sign. From an investment perspective, for a one-year horizon and beyond, these levels are attractive for adding to a portfolio,” Sharma added.

 

He further noted that investors who already hold the stock and have available cash could consider averaging at current levels. The stock has sharply corrected from over ₹1,000 to around ₹700, a drop of nearly 30 per cent. It is rare to see a bank of this size experience such a steep correction in one go.