HDFC Bank shares: Antique cuts target, says Atanu Chakraborty's resignation casts shadow

HDFC Bank: Antique Stock Broking has cut its target price on HDFC Bank Ltd as it believes the part-time Chairman Atanu Chakraborty's resignation has cast shadow over the board and the management team despite improving earnings outlook. The domestic brokerage expects the RBI and the board to make further disclosures on the actions undertaken to assuage the concerns of the outgoing chairman and the investor community at large.

Antique said the chairman's resignation, in his second term, on the reason of 'certain happenings and practices within the bank which are not in congruence with his personal values and ethics' casts a shadow over the board and the management team. 

"A lack of any stated specific instances wherein such incongruency would have occurred, neither by Mr Atanu Chakraborty nor by the interim chairman/management and board members, during the analyst call, remains a point of concern. Prompt support by the regulator for the bank, during this time of crisis, has been the key highlight of the incident. it said.

For now, Antique has retained its 'Buy' rating on the stock but with a revised target price of Rs 1,090 per share against Rs 1,200 earlier, valuing the bank at 2 times FY28 book value per share against 2.3 times earlier. It values the bank subsidiaries at Rs 150 per share. 

The 'Buy' was retained considering the prevailing valuations and expectations of fruits of the merger playing out, in the upcoming quarters. 

"We factor in the recent hardening of the wholesale/retail deposit rates and revise our NII estimates downwards for the forecast period by c. 1-2 per cent. We also adjust our operating expense and credit cost estimates moderately resulting in c. 2-3 per cent cut to our earnings estimates. Our
FY27/FY28 earnings estimate are 2 per cent/3 per cent below consensus estimate respectively," Antique said.
 
The brokerage said the RBI highlighted that its supervisory assessments do not indicate any material concerns regarding governance or conduct. The bank continues to remain well-capitalised with adequate liquidity, and RBI will stay engaged with the board and management through the transition period.

Antique said the management also highlighted no known governance or operational issues at the bank underlying the resignation and highlighted the absence of adverse observations from internal audits or regulatory inspections. 

On the ethics-related remark, the board indicated it is not aware of any specific concern, suggesting limited visibility on the exact cause of the resignation, while attributing the development partly to relationship-driven differences. The management also reiterated that the bank continues to operate under a strong audit, risk, and compliance framework.