HDFC Bank shares fall 4% to hit fresh 52-week low today; here's why

HDFC Bank Ltd hit its fresh 52-week low on Monday, after the bank reportedly fired three employees, including senior executives, following an internal investigation into alleged mis-selling of high-risk AT1 bonds to NRI clients through its overseas operations. There was no such update on stock exchanges. Business Today could not independently verify the report. 

A CNBC-TV18 quoting sources identified employees as Sampath Kumar, Group Head of Branch Banking, along with two other senior executives, Harsh Gupta, Executive Vice President for Middle East, Africa and NRI onshore business, and Payal Mandhyan, Senior Vice President. Gupta and Mandhyan, the CNBC-TV18 report noted, were suspended from the bank in January last year pending the results of the probe into the alleged mis-selling of debt investments in the Dubai branch.

Following the development, HDFC Bank shares fell 3.72 per cent to hit a low of Rs 751.40. A total of 12.40 lakh shares changed hands on BSE within the first hour against a two-week average daily volume of 23.65 lakh shares. 

HDFC Bank shares have been under pressure since the part-time chairman and independent director Atanu Chakraborty has resigned, stating that certain happenings and practices observed over the last two years were not in alignment with his personal values and ethics. He clarified that there are no other material reasons for his resignation and did not attribute the decision to any wrongdoing by the bank.

It followed the RBI's appointment of Keki Mistry as interim part-time chairman for a period of three months, ensuring continuity in board oversight until a permanent appointment is made. The HDFC Bank management Board suggested that no specific concerns were communicated by the outgoing chairman, and even during the board meeting no concrete governance lapse or operational issue was highlighted, with the development possibly arising from personal or relationship differences.

A couple of brokerages cut their target prices following the development.

"While strategy to accelerate growth along with focus on liabilities remains underway, the stock is likely to trade weak in near term following the sudden resignation of part time chairman, with impact further amplified by a subdued macro environment amid geopolitical tensions. Factoring near term uncertainty, we lower our multiple to 2.1x FY28E ABV and add Rs 124 for subsidiaries, thereby reducing our target price at Rs 1,070(earlier Rs 1,150). Given recent price correction, we maintain our BUY rating," ICICI Direct said on March 19. 

Antique retained its 'Buy' rating but suggested a revised target price of Rs 1,090 per share against Rs 1,200 earlier.