HDFC Bank’s American Depositary Receipts (ADRs) continued a downward trend on the New York Stock Exchange (NYSE), falling another 4% on Friday, extending losses triggered by the abrupt resignation of former chairman Atanu Chakraborty. The stock had already experienced a sharp correction on Thursday, shedding approximately 5% and briefly erasing nearly Rs 1 lakh crore in investor wealth, according to reports.
Chakraborty’s resignation, announced Thursday, cited misalignment between his personal values and ethics and “certain happenings and practices” within the bank over the past two years. He did not provide specific details, contributing to ongoing market uncertainty. The lack of specificity prompted the board to urge Chakraborty to reconsider and elaborate on his concerns, according to HDFC Bank chief executive and managing director Sashidhar Jagdishan.
“Every board member” attempted to persuade Chakraborty to withdraw his resignation or clarify his remarks, but he declined, Jagdishan said. Board members themselves expressed surprise, stating that no specific issues had been formally raised during board discussions, according to multiple reports.
Despite the market reaction, some analysts are viewing the stock’s decline as a potential buying opportunity. Deven Choksey suggested the fall has pushed the stock into a “deep value” zone, while acknowledging that recent developments may have introduced a valuation discount. Ishan Tanna of Ashika Capital characterized the situation as “tactical rather than structural,” describing the resignation as a “buy-on-dips opportunity.”
Tanna emphasized the bank’s long-standing track record of strong processes as a source of reassurance. He also noted that management commentary suggests the resignation stemmed from differences in value systems, rather than any regulatory or compliance issues. “It seems to be more about differences in value systems, and not related to any regulatory or compliance problems,” he said.
Sources cited by ET Now indicated the resignation was not prompted by concerns raised by the Reserve Bank of India, but rather by prolonged disagreements over internal practices. Paresh Bhagat, CIO at Veer Growth Fund, stated that the development does not fundamentally alter the bank’s financial outlook. “The absence of any stated business or financial concerns reinforces that this is not an operational signal,” he said, adding that the continuity of leadership at the CEO level remains intact.
While near-term market sentiment remains cautious, investors appear to be focusing on the bank’s long-term fundamentals and valuation, even as details surrounding Chakraborty’s resignation remain limited. The bank has not released further details regarding the specific “happenings and practices” that prompted Chakraborty’s departure.
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