HDFC Bank Stock Falls Despite New CEO Appointment

HDFC Bank, India's largest private lender, is experiencing its worst calendar year performance in nearly two decades. The recent appointment of Anup Bagchi as the new MD & CEO, succeeding Sashidhar Jagdishan, has not yet revitalized the stock, which remains close to its 52-week low of ₹681 as of Wednesday. Analysts, including Rikin Shah of IIFL, suggest that the bank's core margins might be soft in the short term due to stronger corporate loan growth.

Shah further noted that while HDFC Bank's September quarter business update showed a 16.3% loan growth and 18.8% deposit growth, it was a marginal improvement compared to its peers. He anticipates HDFC Bank's earnings will compound at a slower pace over the next two years when contrasted with other private banks such as Axis, Kotak, and ICICI Bank. Persistent FII selling in the Indian market also impacts overweight positions like HDFC Bank.

Despite these near-term headwinds, Shah maintains a 'buy' rating on HDFC Bank for medium-term investors, viewing current levels as a good buying opportunity. However, his preferred order among large private banks is ICICI Bank, followed by Axis Bank, then HDFC Bank, and Kotak Mahindra Bank. This cautious outlook contrasts with the broader analyst community, as 47 out of 49 analysts covering HDFC Bank currently recommend a 'buy'.