We believe that the appointment should offer a smoother transition as Mr. Jagdishan has been closely connected internally with the management team and the board of directors, as well as external stakeholders like clients, investors and regulators. While his appointment has been cleared for three years as of now, he should have about a 15-year career ahead of him – until he turns 70 – and this should offer continuity as well. We maintain our BUY rating with a price target of Rs 1,350 based on 3.3x Jun-22E adjusted PB and value of stake in subsidiaries.
In an uncertain environment like this, we believe an internal candidate who is in sync with the outgoing CEO Mr. Puri is the right choice. Sashi comes with a very diverse experience having handled multiple functions in the bank and hence we believe he is the appropriate choice. What we hear from many employees is that Sashi is a hard task master and what is essential is to ensure the stellar execution track record that HDFC Bank
has built over the years. Also, in our marketing with investors across the globe, Sashi was their preferred choice. Maintain 'outperform' rating on the stock.
Kotak Institutional Equities
From a business perspective, this would likely result in a business-as-usual scenario for the medium term, in our view. Maintain ADD with an unchanged fair value of Rs 1,200. The bank’s strong operating profits, underwriting strength and solid liability franchise should augur well in this leg of the cycle.
The new appointment is very much on expected lines. Mr. Jagdishan was strategically positioned as the preferred choice and this is what street was factoring in. His appointment would lend certainty to the stability of business as usual. Maintain buy rating with a target price of Rs 1,470.
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