- HDFC Bank's independent legal review found no evidence supporting former director's allegations
- US and Indian law firms reviewed thousands of documents and conducted interviews over three months
- Jefferies kept Buy rating with Rs 1,050 target, calling review outcome a relief for investors
HDFC Bank received a fresh vote of confidence from global brokerages after an independent legal review concluded that allegations made by former independent director Atanu Chakraborty were not substantiated.
The review, conducted by US law firm Wilson Sonsini Goodrich & Rosati and Indian law firm Wadia Ghandy & Co., found no evidence to support the concerns raised in Chakraborty's resignation letter. The three-month investigation examined thousands of documents, including board and committee meeting minutes, agenda papers, and interviews with independent directors, the bank's Managing Director & CEO, and senior management. HDFC Bank also said Chakraborty was repeatedly invited to participate in the review, but the interaction did not take place.
Brokerage Views
Following the findings, Jefferies maintained its 'Buy' rating on HDFC Bank with a target price of Rs 1,050. The brokerage said the law firms' review did not find evidence to back the former chairman's comments, calling the outcome a relief for investors. It added that the findings could pave the way for the bank to appoint a new chairman and reiterated that valuations remain attractive, keeping HDFC Bank among its top picks.
Morgan Stanley also retained its 'Overweight' rating with a target price of Rs 1,025. The brokerage said the completion of the legal review related to the former chairman's resignation should improve investor sentiment towards the stock.
JPMorgan maintained its 'Overweight' rating with a target price of Rs 990. The brokerage said the external counsel's conclusions are likely to moderate governance concerns and help narrow the governance risk premium attached to the stock. It noted that HDFC Bank has de-rated by around 8% on a price-to-book basis since the resignation of its former part-time chairman, with its valuation discount to ICICI Bank widening to 23%. JPMorgan also expects HDFC Bank to be a key beneficiary of the Reserve Bank of India's recently announced FCNR deposit initiatives.
ALSO READ: HDFC Bank Says Legal Review Finds No Basis For Ex-Director's Claims
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