HDFC Bank’s share price crashed by more than 8.4% on March 19 after its part-time chairman and independent director, Atanu Chakraborty, resigned.
The development escalated like a wildfire in HDFC Bank, which eroded nearly Rs 1.10 lakh crore of market capitalization at the opening bell. HDFC Bank’s ADR has also nosedived by 7.3%.
HDFC Bank Share Price:
At the time of writing, HDFC Bank share price plunged by 5.14% or Rs 43.30 to trade at Rs 799.65 apiece on BSE, with a market cap of Rs 12,30,819.89 crore, which is already down by Rs 66,647.29 crore from the market value of Rs 12,97,467.18 crore the previous day.
At the opening bell, HDFC Bank’s stock touched an intraday low of Rs 772 apiece, resulting in an overall decline of 8.42% from the previous day. Due to this, as much as Rs 109,116.98 crore in wealth was eroded.
Accordingly, the Rs 772 mark becomes HDFC Bank’s new 52-week low.
HDFC Bank ADR:
Following the chairman’s resignation, HDFC Bank’s ADR listed on the NYSE also faced steep selling pressure. After the closing bell on March 18, the ADR ended at $26.62, down by 7.3%.
HDFC Bank Chairman Resignation:
In its regulatory filing, HDFC Bank informed that Atanu Chakraborty tendered his resignation as the Part-time Chairman and Independent Director of the Bank with immediate effect, for reasons mentioned in the resignation letter.
“We confirm that there are no reasons other than those mentioned in the said letter, for the resignation of Chakraborty. Further, Chakraborty does not hold directorship in any other company,” confirmed HDFC Bank.
The lender’s board of directors also placed on record its appreciation for Chakraborty’s contribution to the Bank during his tenure and wishes him all the success in his future endeavors.
For the continuation, RBI granted its approval for the appointment of Keki Mistry as an interim part-time chairman of HDFC Bank with effect from March 19, 2026.
Then why did HDFC Bank shares plunge just because of the part-time chairman’s resignation? It was Chakraborty’s resignation letter that sparked concerns regarding ethical practice in the HDFC Bank management.
GoodReturns reached out to HDFC Bank. The reply is awaited.
Meanwhile, Keki said, “I would not have taken this responsibility at the age of 71 if it were not aligning to my values and principles.” Adding, he said, “No major issues at HDFC Bank, personal difference of opinion possible.”
During an investors and analysts call on March 19, HDFC Bank’s CEO, Sashidhar Jagdishan confirmed that, “We will re-examine our organization structure and will announce it at an appropriate time with approval of the board.”
“This is an unfortunate event; we are in a strong & resilient economy; bank has had a wonderful merger and it takes time; fruits of merger will play out,” Jagdishan added.
Why Did Atanu Chakraborty Resign?
In his resignation letter, Chakraborty said, “I joined the Board of HDFC Bank in May 2021. My tenure on the Board saw momentous events like merger of the bank with HDFC Ltd that created a conglomerate under the Bank. This strategic initiative made HDFC Bank the second largest Bank in the country. Though, the benefits of merger are yet to fully fructify.”
“Certain happenings and practices within the bank that I have observed over last two years are not in congruence with my personal Values and Ethics. This is the basis of my aforementioned decision,” he added.
He further said, “I confirm that there are no other material reasons for my resignation other than those stated above.”
HDFC Bank Credit Rating:
Amidst the management conundrum, India Ratings affirmed HDFC Bank Limited’s (HDFC) Long-Term Issuer Rating at ‘IND AAA’ with a Stable Outlook.
Ind-Ra’s ratings reflect HDFC’s financial strength, diverse earning profile, and sustained strong through-the-cycle performance in the Indian banking system. The systemic importance of HDFC continues to be reflected in its pole position among private banks and second-largest position after State Bank of India (‘IND AAA’/Stable), as well as it being classified as a domestic systemically important bank since 2017 by the Reserve Bank of India (RBI).
The bank’s retail focus on both the asset and liability sides has resulted in a high-yielding granular asset book and a stable and strong funding profile.
Ind-Ra noted that the bank’s strong capital buffers and market access to raise capital provide it the ability to target higher-than-system advances growth, which is only limited by the high loan-to-deposit ratio, which has resulted from the successful amalgamation with its promoter HDFC Limited (HDFCL) effective 1 July 2023.
Buy/Sell HDFC Bank Shares?
The consensus recommendation from 38 analysts for HDFC Bank is STRONG BUY, as per Trendlyne. The average target price is set at Rs 1152.82 apiece, signaling at nearly 44% potential upside ahead.
Meanwhile, global brokerage JP Morgan affirmed its Neutral stance on HDFC Bank with a target price of Rs 1,090. Morgan, in its note, said that the stock is likely to trade weak following the resignation announcement, with impact further amplified by a softer macro backdrop amid geopolitical uncertainties.