In the wake of Atanu Chakraborty's surprise exit as part-time chairman, HDFC Bank has been removed from Macquarie's marquee buy list as the stock continues to face pressure in the market.
In its latest note, Macquarie has said that the HDFC Bank stock may continue to underperform in the near-term. And while fundamentals remain strong with good return on assets, concerns over governance could weigh heavily on the stock.
Keeping that in mind, Macquarie wants more comfort at a board level, especially considering the fact that MD & CEO Sashi Jagdishan's reappointment is also uncertain, even though the lender is actively working on it.
Therefore, Macquarie has removed HDFC Bank from the marquee buy list, adding that two of the biggest risks include a slowdown in growth and further governance issues cropping up.
READ MORE: HDFC Bank Boardroom Change Sparks Uncertainty, But Experts Still Positive On Long-Term Value
This comes after the stock of HDFC Bank faced immense pressure in trade on Thursday, with the shares trading with cuts of around 4%. This comes despite the fact that the management of HDFC Bank, in a conference call earlier in the day, had clarified that there is no material problem with the lender's book.
The newly-appointed interim part-time chairman, Keki Mistry, has clarified that the financial health of HDFC Bank remains robust, adding that the regulators have been conducting online and offline inspections of the bank and are happy with the lender.
Nevertheless, Macquarie remains constructive on HDFC Bank overall and still has an outperform rating on the lender. The firm maintains a target price of Rs 1,200, which suggests upside of around 43% from the stock's current levels.
READ MORE: RBI Sees 'No Material Concerns' After Atanu Chakraborty's Exit From HDFC Bank
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