rose about 1 per cent in early trade on Monday after the lender said an independent legal review conducted by two external law firms raised by former chairman Atanu Chakraborty in his resignation letter or subsequent public statements.
The stock gained 1.16 per cent to ₹805.60 in early trade from its previous close of ₹796.30 as investors reacted positively to the outcome of the review.
The bank said the review, announced on March 24, examined whether concerns flagged by Chakraborty were evident from the records, whether he had recorded any dissent during his tenure, and whether such dissent, if any, had been addressed.
Chakraborty had resigned as chairman of HDFC Bank, citing ethical concerns. His resignation marked the first time a part-time chairman of the bank stepped down before completing the term, raising questions over the lender’s governance.
Following the legal review, HDFC Bank’s board may seek to However, legal and banking experts believe the Reserve Bank of India is unlikely to rely solely on a review conducted by law firms appointed by the bank, noting that the report would form only one part of the regulator’s broader “fit and proper” assessment.
JPMorgan maintained its overweight rating with a target price of ₹990, saying the external counsel’s findings should help moderate governance concerns. The brokerage believes the conclusions could narrow the governance risk premium after HDFC Bank’s valuation de-rated by 8 per cent on price-to-book value since the former part-time chairman’s resignation. It also expects the bank to be a key beneficiary of the recently announced FCNR initiatives.
Morgan Stanley maintained its overweight rating with a target price of ₹1,025. The brokerage said the completion of the legal review related to the former chairman’s resignation should improve investor sentiment towards the stock.
Jefferies retained its buy rating with a target price of ₹1,050. It said the law firms’ review finding no evidence to support the former chairman’s allegations is a relief for investors and may pave the way for the appointment of a new chairman. The brokerage added that valuations remain attractive and continues to see HDFC Bank among its top picks.