HDFC Bank share price target: 2 CEO candidates; what can rerate stock?

With the HDFC Bank board submitted a list of two candidates to the RBI for consideration as MD & CEO for a three-year tenure, all eyes are on whether there will be an internal candidate or external candidate. Foreign brokerage Nomura said an external candidate, if accompanied by a clear roadmap, could rerate underperforming HDFC Bank shares.

Kaizad Bharucha, Deputy MD & CEO, is largely seen as the internal candidate for the post while an external private banker could be ICICI Prudential Life's Anup Bagchi, HSBC's Hitender Dave or Citibank India's K Balasubramanian, as per reports.

Nomura said an internal appointment could provide initial relief by ensuring continuity and limiting disruption. It said Kaizad’s familiarity with the bank and its businesses would also allow for a smoother transition.

"However, a credible external candidate could offer a longer runway and a cleaner slate. In our view, this could be more significant for the stock over the medium term, as a new leader would have greater scope to reassess strategy, challenge existing practices and drive a strategic reset," Nomura said.

The foreign brokerage said as the stock has materially underperformed and  a credible external appointment with a strong operating track record could, therefore, emerge as a catalyst for a re-rating, particularly if accompanied by a clear roadmap on growth, deposits, margins and returns.

"The leadership transition remains the more important near-term stock catalyst. An internal appointment could provide initial relief by removing succession uncertainty and ensuring continuity. However, we believe a qualified external candidate with a strong banking track record could be more supportive of a sustained re-rating, given the potential for a strategic reset and a longer leadership runway," it said.

The brokerage maintained 'Buy', valuing HDFC Bank at 1.9 times March 2028 book value per share to arrive at a target price of Rs 950, with subsidiaries contributing Rs 105 per share.

The Bahrain High Civil Court has rejected all seven cases filed against HDFC Bank by investors in the Credit Suisse AT1 bonds matter. The final two proceedings were rejected on September 9, following five similar cases that were dismissed during July and August.

The cases related to allegations concerning the purchase of Credit Suisse AT1 bonds through HDFC Bank. According to the bank, the Bahrain court rejected the allegations after finding that the investors had not produced sufficient admissible evidence to substantiate their claims or establish that the losses suffered were attributable to HDFC
bank.