Since Sashidhar Jagdishan succeeded Aditya Puri as managing director and chief executive officer in October 2020, HDFC Bank has undergone two reorganizations.
Following HDFC Ltd.’s acquisition of HDFC Bank, the shares of that institution have dropped by more than 9% in the last three weeks.
As the bank restructures its senior management following a merger with HDFC Ltd. in July, attention will stay on the shares of HDFC Bank on October 4. Since Sashidhar Jagdishan succeeded Aditya Puri as managing director and chief executive officer in October 2020, there have been two reorganizations.
According to sources, the bank informed staff members of the changes in a memo on October 1. As the bank places an emphasis on technology for expanded services, Ramesh Lakshminarayanan’s information technology and digital activities now directly answer to CEO Sashidhar Jagdishan. A seasoned bank employee, Ashish Parthasarthy, would be in charge of managing the vital operations of the retail branch, including deposits and product delivery.
Parthasarathy is regionally revamping the retail branch business for improved product management and expansion. Sampath Kumar and Smita Bhagat will share leadership of this project. A senior leader at the bank, Bhagat oversaw start-ups, government, institutional, ecosystem, and inclusive banking. According to CNBCTV18, Kumar oversaw liability goods, third-party products, and non-resident business.
This may be done to improve branch ramp-up, where duties will be distributed regionally, and to (1) stimulate development in mortgages, where Mr. Arvind Kapil will have exclusive control. Also receiving much-needed direct reporting to the CEO is IT and Digital. Growth and investor comfort would depend on the acceleration of deposits and housing book, according to Jefferies India’s most recent report. The brokerage firm kept the stock’s buy recommendation and raised its target price to Rs 2030 per share, a 33 percent rise over the current market price.
After HDFC Ltd. was acquired, the share price of HDFC Bank dropped by more than 9% during the course of the last three weeks.
Analysts, however, say that it is now selling at acceptable values (2.1x Mar’25E ABV and 13x EPS) and that it provides long-term investors a positive risk-reward ratio. They believe that the stock’s performance will increase as growth and earnings eventually increase. Analysts anticipate a short-term drop in HDFC Bank’s net worth, asset quality, and net interest margin (NIM) following the merger with its parent firm HDFC. The higher CRR and surplus liquidity following the merger might result in a 25 basis point NIM drop, according to Srinivasan Vaidyanathan, CFO of HDFC Bank.
With the combined entity’s margin anticipated at 3.7-3.8 percent in June, down from the bank’s prior standalone margin of 4.1 percent, this might lead to reduced profitability for the bank in the second quarter.
A few technical indicators are in the oversold area, and the stock is quite near to its support range of Rs. 1470-1500. It could experience some relief in this area. It will be challenging to maintain current levels, though. If it does recover, there would be instant resistance in the range of Rs. 1560–1600, according to Aamar Deo Singh of Angeline.
