Shares of HDFC Bank (HDBK.NS) gave up early gains to close lower on Monday as investors weighed the impact of Anup Bagchi’s appointment as CEO at India’s biggest private lender.
The veteran banker, the first outsider to lead the Mumbai-based bank, succeeds Sashidhar Jagdishan, who decided not to seek reappointment after his second three-year term ends in late October. Bagchi pipped insider and Deputy Managing Director Kaizad Bharucha, who was also among the contenders for the post.
HDFC shares, which have the largest weight on India’s Nifty 50 benchmark index, closed 2.3% lower at 704.8 rupees, wiping off 252.58 billion rupees ($2.62 billion) in market capitalisation, while the benchmark rose 0.6%. The stock had risen about 1.8% in early trade.
While most brokerages backed Bagchi’s appointment, some analysts warned it would take time for him to settle in.
He would first need to rebuild the team, and over the longer term, he could bring fresh ideas and help ease governance concerns, said Anand Dama, head BFSI analyst at Nuvama.
Bagchi, currently CEO at ICICI Prudential Life Insurance, had held senior roles at ICICI Bank (ICBK.NS) the country’s second-biggest private lender, where he oversaw the retail and wholesale banking businesses. He also led ICICI Securities for six years.
At 56, he has a long runway to remain at the helm of HDFC Bank under Reserve Bank of India regulations, which cap a bank CEO’s age at 70.
A key overhang surrounding the bank’s leadership has been removed at a time when the firm is seeking to rebuild investor confidence, said Motilal Oswal. Bagchi’s experience will be an asset, the brokerage said.
HDFC Bank on Saturday also posted a jump of around 18.8% in its deposits and a 16.3% rise in its gross advances as of September end.
“While the provisional data and appointment of an outsider CEO were positive, investors may be pricing in a period of clean-up and operational changes before growth accelerates. That could mean a few more quarters of pressure on the operational performance,” said Neeraj Dewan, an independent analyst.
HDFC Bank has so far underperformed peers after a 2023 merger with its parent weighed on its margins and growth. Chairman Atanu Chakraborty’s abrupt March resignation over governance concerns further weighed on sentiments, even though an independent legal review did not substantiate his claims.
The stock now trades at a 25% discount to ICICI on a price-to-adjusted book value basis, and is down nearly 31% since it hit a record high in 2025.
Source: Reuters