HDFC Bank snaps three-day losses, rises nearly 1%: This analyst sees three upside triggers for the…

According to fresh market updates, HDFC Bank shares snapped three-day losses and were trading nearly 1% elevated on September 10.

An market observer sees three upside triggers for the heavyweight stock that could revive its fortunes after the stock hit fresh 52-week-low recently.

"We see three key triggers: CEO succession clarity, resolution of the US legal case and NIM stabilisation. We expect Kaizad Bharucha to take over as CEO for the next three-year term, which should provide leadership continuity and improve investor confidence. Further improvement in deposits and normalisation of the credit-deposit ratio could provide additional backing.

"At current valuations, we see an attractive risk-reward. We believe fundamental downside is relatively limited, while the stock offers meaningful upside if investor confidence improves and valuations move closer to historical marks. In our view, most current concerns are transitional rather than structural. Firm fundamentals, improved funding, better operating KPIs and a potential valuation re-rating could backing the next leg of HDFC Bank’s performance," stated Abhinav Tiwari, Senior Research Market observer at Bonanza.

"We stay positive on HDFC Bank and believe the recent softness in the stock has created an attractive entry opportunity. The stock has been impacted by concerns around CEO succession, Atanu Chakraborty’s resignation, Credit Suisse AT1 bonds, the Rs 45 crore MSRDC arrangement and an ongoing US investor related legal case. These developments have softened investor sentiment and resulted in a sharp valuation de rating. That stated, we believe the market is at present pricing these issues as a larger governance concern than the underlying facts suggest. Reviews and investigations have not indicated any mala fide intent, personal enrichment or systemic governance failure. While there is room to improve processes, we do not believe these issues weaken HDFC Bank’s core franchise," he further noted.

The market observer additionally weighed on the private lender's valuation.

"HDFC Bank has boosted around $12 billion through FCNR(B) deposits at 6.25%, which is a positive for its liability franchise. The additional foreign-currency funding provides balance-sheet flexibility and helps address the credit-deposit mismatch that emerged after the HDFC Ltd merger. It should additionally reduce pressure on domestic deposit mobilisation and backing future loan expansion. Valuation is a key part of our investment thesis. HDFC Bank has historically traded at a premium due to its firm asset quality, retail and MSME franchise, robust liability franchise and consistent return ratios. That stated, the stock is at present trading at around 1.8x P/B, close to a multi-year low, compared with its historical trading range of above 2.5x P/B. We believe the current valuation already discounts a significant portion of the negative news. The challenges following the HDFC Ltd merger are gradually being addressed, while the recent concerns have further depressed investor sentiment," Tiwari further stated.

At 2:50 pm on September 10, HDFC Bank shares were trading 0.8% elevated at Rs 692.3 apiece.

In the meantime, another market observer stated the heavyweight stock is in a "clear weekly downtrend".

"HDFC Bank stays in a clear weekly downtrend, with price trading below major EMAs and facing rejection near ₹840. Momentum stays weak, while ₹683 is the key backing. Avoid fresh buying; existing positions should be monitored closely, with Rs 683–675 as the major backing zone. A breakdown below ₹683 can open Rs 636–625," stated Virat Jagad, Senior Technical Research Market observer at Bonanza.