Uncertainty at HDFC Bank ends, Sashidhar Jagdishan a hard task master & investors’ choice: Brokerages

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With the appointment of Sashidhar Jagdishan as Managing Director & Chief Executive Officer (CEO) of HDFC Bank, the CEO succession uncertainty lingering for last few weeks is over now, global brokerages feel.

Aditya Puri, the current MD of the country's largest private sector lender, had hinted earlier that next MD & CEO would be the internal candidate only.

And that came true when Reserve Bank of India on August 3 approved the appointment of Sashidhar Jagdishan as Managing Director & CEO of the bank for a period of three years w.e.f. October 27, 2020.

Aditya Puri is due to retire as Managing Director of the bank on October 26.

"CEO succession uncertainty finally ended, which is positive for the bank. Sashi has been closely connected with internal/board & external stakeholders. His appointment should make the transition at the bank smoother," said Citi while having a buy rating on the stock with a target of Rs 1,350 per share, implying 30 percent potential upside from current levels.

Sashidhar Jagdishan has been working in HDFC Bank since 1996 when he was appointed as a Manager in the finance function.

Sashi is currently the Group Head of Finance, Human Resources, Legal & Secretarial, Administration, Infrastructure, Corporate Communications, Corporate Social Responsibility & the Strategic Change Agent of the bank.

"Sashi Jagdishan is the right choice and a big positive. He ensures continuity. He is 'hard task master & investors' choice too," said Macquarie while retaining outperform call on the stock with a target of Rs 1,114 per share, implying 7 percent potential upside.

HDFC Bank's stock price has been under pressure due to concerns around the succession and the recent attrition in the top management. The stake sale by Aditya Puri had also impacted the sentiment and raised uncertainty over the CEO finalisation. The stock had corrected 12 percent in two weeks before the finalisation of CEO by RBI

"Although some concerns remain around top-level attrition, the RBI's approval addresses a major overhang on the stock's performance as Mr Jagdishan has been with the bank for the past several years; thus, succession by an internal candidate augurs well to boost investor confidence and continue the impeccable performance the bank has witnessed under the leadership of Mr Puri," said Motilal Oswal.

With the system challenged by the impact of the COVID-19 outbreak, the brokerage believes large banks are relatively better placed to tide over this crisis. Thus, it remained positive on HDFC Bank and maintained buy call with a target of Rs 1,280, implying 23 percent potential upside.

Disclaimer: The above report is compiled from information available on public platforms. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.