Brokerage firm Macquarie Capital removed HDFC Bank from its ‘Marquee Buy’ list following the abrupt resignation of its part-time chairman Atanu Chakraborty, said media reports. This raised fresh concerns around corporate governance at the country’s largest private lender.
Chakraborty stepped down with immediate effect, stating that certain developments and practices at the bank over the past two years were not aligned with his “personal values and ethics.” His exit, despite being in his second term after joining the board in May 2021, has triggered investor caution and intensified scrutiny.
This led to an over of ₹772 on BSE on Thursday, March 19.
Despite this, the brokerage retained its ‘Outperform’ rating on the stock with a 12-month target price of ₹1,200. This indicates an upside potential of over 55% from today’s low, indicating confidence in the bank’s long-term fundamentals.
Governance concerns take centre stage
Reports stated that Macquarie has flagged governance-related uncertainties, which could weigh on the stock in the near term, even as the bank’s core fundamentals remain intact.
“Near-term underperformance may persist. While fundamentals remain strong with healthy return on assets (RoA), governance concerns will weigh heavily on the stock at this point,” the brokerage was quoted saying by the reports.
It added that investors would look for greater clarity and reassurance from the board, especially with uncertainty surrounding CEO Sashidhar Jagdishan’s reappointment, which is due for review in October 2026.
“Investors would seek greater comfort from the board. Additionally, uncertainty around Sashi’s reappointment could act as an overhang. Key risks include a slowdown in growth and any further governance issues,” it added.
What management and regulators said
Following the resignation, the bank clarified that it was not aware of the specific reasons behind Chakraborty’s exit, noting that he did not provide detailed explanations despite repeated queries.
“The board is not aware as to why the Chairman resigned. In fact, they repeatedly asked him and he didn’t give any specific reasons,” Macquarie noted, adding that new chairman Keki Mistry hinted at a possible relationship issue between the former chairman and the management—something analysts interpret as a potential power struggle.
Mistry, however, downplayed concerns around governance lapses. “Based on our discussions, there were no specific happenings and practices that were brought to our attention. There were no specific operational or other issues that have been highlighted,” he said during a conference call.
Highlighting key takeaways from the call, Macquarie, as per reports, said, “The board is not aware as to why the Chairman resigned. In fact, they repeatedly asked him and he didn’t give any specific reasons. The new Chairman Keki Mistry also said that there could be some relationship issue between Atanu (ex-chairman) and the management which we interpret as a possible power struggle.”
Macquarie also highlighted that there were no material concerns flagged by regulators or internal mechanisms. “The regulators have been regularly doing onsite and offsite inspections and comfortable with the bank. Compliance and governance and controls remains very strong,” the brokerage said.
CEO Sashidhar Jagdishan further sought to reassure stakeholders, stating there were no internal conflicts at the top level and affirming alignment with Deputy Managing Director Kaizad Bharucha on strategic priorities.
Meanwhile, the in the lender, stating that it had no concerns regarding the bank’s conduct or governance. The central bank also approved the transition arrangement for the new part-time chairman.
“HDFC Bank is a Domestic Systemically Important Bank (D-SIB) with sound financials, professionally run board and competent management team. Basis our periodical assessment, there are no material concerns on record as regards its conduct or governance,” the RBI said.
HDFC Bank was previously part of Macquarie’s ‘Marquee Buy’ list, which includes industry leaders such as , , , , and .
Going ahead, all eyes will be on the Nomination and Remuneration Committee, which is expected to decide on Jagdishan’s reappointment later this year, a key event that could influence investor sentiment and the stock’s near-term trajectory.
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