HDFC Bank shares snapped three-day losses and were trading nearly 1% higher on September 10.
An analyst sees three upside triggers for the heavyweight stock that could revive its fortunes after the stock hit fresh 52-week-low recently.
"We see three key triggers: CEO succession clarity, resolution of the US legal case and NIM stabilisation. We expect Kaizad Bharucha to take over as CEO for the next three-year term, which should provide leadership continuity and improve investor confidence. Further improvement in deposits and normalisation of the credit-deposit ratio could provide additional support.
"At current valuations, we see an attractive risk-reward. We believe fundamental downside is relatively limited, while the stock offers meaningful upside if investor confidence improves and valuations move closer to historical levels. In our view, most current concerns are transitional rather than structural. Strong fundamentals, improved funding, better operating KPIs and a potential valuation re-rating could support the next leg of HDFC Bank’s performance," said Abhinav Tiwari, Senior Research Analyst at Bonanza.
"We remain positive on HDFC Bank and believe the recent weakness in the stock has created an attractive entry opportunity. The stock has been impacted by concerns around CEO succession, Atanu Chakraborty’s resignation, Credit Suisse AT1 bonds, the Rs 45 crore MSRDC arrangement and an ongoing US investor related legal case. These developments have weakened investor sentiment and resulted in a sharp valuation de rating. However, we believe the market is currently pricing these issues as a larger governance concern than the underlying facts suggest. Reviews and investigations have not indicated any mala fide intent, personal enrichment or systemic governance failure. While there is room to improve processes, we do not believe these issues weaken HDFC Bank’s core franchise," he added.