HDFC Bank: Retail investors lose Rs 9,500 crore in 3 days; FPIs hit hard

Retail investors lost nearly Rs 9,500 crore in notional wealth as HDFC Bank Ltd extended its fall to the third straight session on Friday amid concerns over part-time Chairman Atanu Chakraborty’s resignation, who cited a "lack of congruence with personal values and ethics" at the lender while resigning. Foreign portfolio investors (FPIs), who held a significant stake in the bank at the end of December quarter, were hit hard.

 A total of 35.39 lakh individual investors, holding nominal share capital up to Rs 2 lakhs, owned 9.41 per cent stake in HDFC Bank at the end of December quarter. That stake was worth Rs 1,13,039 crore at Friday's closing against Rs 1,22,512 crore on March 17, down Rs 9,472 crore. 

Foreign portfolio investors (FPIs) took Rs 47,986 crore notional hit. The institutional class held 47.67 per cent stake in the private lender at the end of third quarter. Mutual funds also saw Rs 26,837 crore notional loss, based on December quarter shareholding pattern. HDFC Bank shares settled the day at Rs 780.45, down 2.41 per cent.

LIC owned 63,57,41,433 shares, or 4.77 per cent stake in the bank. Government of Singapore (2.46 per cent), Vanguard Total International Stock index Fund (1.24 per cent) and Government Pension Fund Global (1.22 per cent) were among FPIs holding stakes in HDFC Bank at the end of December quarter. Among domestic funds and ETFs, SBI Nifty 50 ETF held 7.28 per cent. ICICI Prudential Large Cap Fund (3.45 per cent) and HDFC Flexicap Fund (2.87 per cent). 

Investors would like to have more comfort in the board after the episode. The upcoming MD & CEO’s renewal in a few months time may also put pressure on HDFC Bank stock price performance, it said. 

"While the re-rating on HDFC Bank was contingent on the bank’s performance improving and RoA stabilising at near pre-merger levels, the current development will further delay the re-rating of the stock," said Axis Securities. 

The brokerage said a clarity on leadership succession, including appointment of a permanent Chairman and progress on MD & CEO re appointment, remains a key catalyst.

Emkay Global said HDFC Bank has struggled since the top management transition since October 2020, followed by the suspension of its Credit Card business by the RBI and the HDFCL merger, hurting its
growth and margin trajectory. 

"However, the management has exhibited confidence on growth and margin recovery, aided by easing regulatory pressures and a pause in the rate cycle. It reiterated in the analyst call that recent KMP and Chairman exits will not derail the turnaround, while indicating a potential organisational rejig," Emkay Global said. 

Antique Stock Broking has cut its target price on HDFC Bank as it believes the Atanu Chakraborty's resignation has cast shadow over the board despite improving earnings outlook. 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. 

JM Financial said the near-term stock performance may remain under pressure as investors would like to have more comfort in the board after the episode. The upcoming MD & CEO’s renewal in a few months time may also put pressure on HDFC Bank stock price performance, the domestic said. 

MOFSL maintained 'Buy' with a target price of Rs 1,100 on the stock.