HDFC Bank shares gain over 2% as CEO Jagdishan rejects new term; Morgan Stanley, Jefferies, others weigh in

HDFC Bank's shares climbed 2.7% to reach a peak of Rs 739.50 on the BSE on Monday after several analysts maintained optimistic outlooks on the stock following CEO Sashidhar Jagdishan's choice not to seek another term. Jagdishan's current mandate expires on October 26, 2026. The bank disclosed in a recent filing that its board had attempted to persuade Jagdishan to stay on, but he remained resolute in his decision not to seek reappointment.

The board is now on the fast track to identify his successor, complying with the timeframe set by the regulator. One potential internal candidate for the role is current Deputy Managing Director Kaizad Bharucha, who has been on the board since 2014 and assumed the position of Deputy MD in April 2023. However, the 15-year limit imposed by the RBI on the tenure of a Whole-Time Director at a private bank poses a challenge.

Bharucha's current term on the board runs until 2029. Analysts have reacted positively to the news, with Bernstein retaining its 'Outperform' rating on HDFC Bank with a target price of Rs 1,150, suggesting a 60% upside from the current price. Morgan Stanley has also maintained its 'Overweight' rating on HDFC Bank with a target price of Rs 1,025, predicting a 42.3% upside.

Jefferies, on the other hand, has reduced its target price to Rs 880 from Rs 1,050 and sees the leadership transition as a potential risk to the stock's valuation due to uncertainty.