Target: ₹1,500
CMP:₹781.70
The resignation-related release of ex-Chairman of HDFC Bank, Atanu Chakraborty, was not the usual benign farewell that one typically expects in such cases. It mentioned, ‘…concerns over certain happenings and practices, not aligning with his personal values and ethics’. Given the specific context of a bank, that too India’s largest private bank, these words do carry weight.
The near-automatic instinct to assume the worst, is understandable. In fact, the moderate price reaction in a weak market is a testimony to the fact that reputation wise HDFC Bank is a ‘little more equal’ than most other banks.
The bank has been able to rope in Keki Mistry as interim Chairman with blessings of the regulator. This is critical given the bank’s systemic importance. It also held a call to clarify its stance on all issues and we view the wide variety of board members and executives in attendance as a clear show of unity and confidence.
The management came out with the upfront statement that no operational or material issues were brought to their notice. Multiple board members mentioned that in their meeting with the outgoing Chairman, they had queried him multiple times about the nature/details of his misgivings but did not receive any response.
We feel it is quite likely that the outgoing chairman might have had differences of opinion with the management group.