Shares of HDFC Bank Ltd. are expected to be under pressure on Thursday after part-time chairman Atanu Chakraborty quit citing concerns over practices that he said were not aligned with his personal values and ethics.
In his resignation note, Chakraborty stated that his decision was driven by issues related to principles rather than any operational or material factors. He clarified that there were “no other material reasons” behind his move.
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Sources told NDTV Profit his exit comes on the back of differences with other management and board members and were not linked to any regulatory concerns.
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Chakraborty was seen colliding with executive leadership and not aligned on key strategic decisions like the HDB Financial Services Ltd.-MUFG deal talks.
Analysts said Chakraborty's exit adds to headwinds for India's top private sector bank and sentiment will take a hit with elevated volatility in the near-term.
JPMorgan said the stock is likely to trade weakly following the resignation announcement, with the impact further amplified by a softer macro backdrop amid geopolitical uncertainties. The resignation does raise some concerns about potential material disagreements that could widen the governance risk premium embedded in the stock.
Though the letter does not allege specific misconduct, perception alone can weigh on sentiment until credible steps are outlined and delivered, analysts said.
Kotak Securities said HDFC Bank's valuation multiples have already de‑rated "meaningfully" and the leadership churn is likely to prolong the recovery, making normalisation slower than previously anticipated. "Valuation upside is unlikely to materialise until the current issues are decisively resolved and the news-flow becomes materially less concerning," a note said.
Shares of HDFC Bank settled flat at Rs 843.05 on Wednesday, ahead of the announcement, compared to a 0.8% rise in the benchmark Nifty 50. The stock is down 15% year-to-date.
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