HDFC Bank shares reversed an early rally on Monday, slipping into the red after gaining nearly 3% in morning trade, as investors turned their attention to the uncertainty around the bank’s next managing director and CEO.
The stock was trading at Rs 707.30, down Rs 12.70 or 1.76%, in the latest market data shared by the exchange. It had opened at Rs 721.60 and climbed to a day’s high of Rs 739.50 before falling to a low of Rs 704.40. The stock’s previous close was Rs 720.00.
The reversal comes after MD and CEO Sashidhar Jagdishan informed HDFC Bank’s board that and will retire on October 26. The bank has said it will fast-track the process of appointing his successor.
The immediate concern for investors is the uncertainty around who will take over as HDFC Bank’s next CEO and how the leadership transition could affect the lender’s growth trajectory.
Moneycontrol reported that the bank expects to appoint a new CEO well before Jagdishan’s retirement and that both internal and external candidates could be considered.
Reuters has reported that deputy managing director Kaizad Bharucha could be among the candidates, while CNBC-TV18, citing sources, reported that former State Bank of India chairman Dinesh Khara is also being considered.
The choice of successor has therefore become an important factor for investors, particularly as the bank continues to deal with some of the after-effects of its merger with erstwhile HDFC Ltd.
Despite Monday’s reversal, brokerages have largely retained a positive view on HDFC Bank, although several have flagged near-term uncertainty around the CEO transition.
Bernstein retained its ‘outperform’ rating with a target price of Rs 1,150. It views the leadership change as a potential opportunity for the bank to reset its narrative and sees around 60% upside from Friday’s closing price.
JPMorgan also retained its ‘overweight’ rating, with a target price of Rs 990. It said the development could weigh on the stock in the near term, but a timely succession could remove the leadership overhang. A revival in net interest income growth will also be important for restoring investor confidence.
IIFL described Jagdishan’s decision as neutral to modestly positive, noting that it removes the risk of a potentially truncated second term. It said Bharucha could be a possible internal candidate, although tenure considerations could limit his runway. An external candidate could instead provide a fresh leadership reset and potentially a longer tenure.
Other brokerages have taken a more cautious approach.
Jefferies maintained its ‘buy’ rating but cut its target price to Rs 880 from Rs 1,050 and lowered its FY27-29 earnings estimates by 3% each. It expects the transition could affect revenue momentum, particularly deposit mobilisation and fee income, while uncertainty could increase the bank’s cost of equity and put pressure on valuations.
ICICI Securities also retained its ‘buy’ call but lowered its target price to Rs 920 from Rs 1,020, citing uncertainty around the CEO succession.
Axis Capital, meanwhile, maintained its ‘buy’ rating and Rs 1,030 target price. It said Jagdishan’s decision removes concerns around the possibility of a shorter second term and opens the way for a successor who could potentially receive a full three-year tenure.
The leadership uncertainty comes after a weak year for HDFC Bank shares.
The stock closed at Rs 720.30 on August 28, up 1.3% on the day. However, it has fallen 27.3% so far in 2026, substantially underperforming the Nifty 50, which has declined 7.5% over the same period.
HDFC Bank’s market capitalisation remains above Rs 11.1 lakh crore.
For investors, the focus will now be on how quickly HDFC Bank names its next CEO and whether the new leadership can address concerns around growth, deposits and earnings while giving the bank a clearer direction following the merger.
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