gained 5% to Rs 672 on the BSE early morning deals after the private sector lender on Saturday appointed Amitabh Chaudhry
as Managing Director & CEO (MD& CEO) effective January 1, 2019.
“The board of directors of the Bank at its meeting held today has taken on record the approval granted by the Reserve Bank of India (RBI) to the appointment of Shri Amitabh Chaudhry
as the Managing Director & CEO of the Bank, for a period of 3 years, with effect from 1st January 2019 up to 31st December 2021 (both days inclusive) and the terms and conditions relating to the said appointment, including remuneration,” Axis Bank
said in a regulatory filing.
is currently the MD & CEO of HDFC Standard Life Insurance Company.
He will take over from Shikha Sharma
after she demits office on December 31, 2018.
Analysts see this as a positive for Axis Bank, as Mr. Chaudhry has a proven track record of successful leadership all through his career and will bring more emphasis on risk/compliance management and corporate governance.
"The development is positive for Axis Bank
and we revise our target multiple to 2.4x (from 2.0x earlier). However, further, re-rating will be driven by further visibility on execution, strategic changes, and improved earnings profile. Maintain ‘HOLD’ rating," write Kunal Shah and Prakhar Agarwal of Edelweiss Securities in a note.
Axis Bank has outperformed the market by surging 34% from its recent low of Rs 505 on June 28, 2018. In comparison, the S&P BSE Sensex has gained 10% during the same period.
On Monday, the stock moved up 4% at Rs 673 in intra-day trade, as compared to 0.48% decline in the benchmark index. A combined 9.08 million equity shares have changed hands on the NSE and BSE so far.
On the flip side, they believe the development to be a near-term overhang on HDFC Standard Life Insurance's stock given the leadership change, uncertainty around replacement and higher valuations.
"HDFC Life is an institution in itself with best-in-class metrics and should be able to attract the best talent. Similarly, how the partnership of Axis Bank evolves with Max Life will be interesting to watch," they add.