HDFC Bank’s $100BN Tug-of-War: Global Upgrades vs. Domestic Downgrades on Good Friday
A high-stakes divide has emerged among top brokerages over HDFC Bank this Good Friday. While global giants like Jefferies and JP Morgan have issued aggressive "Buy" upgrades, citing a generational low in valuations and a potential 69% upside, domestic heavyweight Axis Securities has dropped the lender from its "Model Portfolio" for April.
- Republic Business
- 2 min read
A high-stakes tug-of-war is going on over India’s largest private lender this Good Friday, as global heavyweights and domestic brokerages take opposite views on HDFC Bank’s recovery path following its 26% correction.
JP Morgan and Jefferies have issued aggressive upgrades, citing a generational low in valuations. Whereas domestic major Axis Securities made waves today by removing the banking firm from its top "Model Portfolio" for April. The debate, is the worst of the merger over, or is more trouble with management and profits coming?
The Bull Case
JP Morgan upgraded the stock to ‘Overweight,’ noting that the risk-reward ratio is at its most attractive level since the HDFC Ltd merger. Jefferies also set a target of ₹1,240, hence, representing a massive 69% upside from current levels.
Global analysts argue that the market has grossly overreacted to the recent exit of Chairman Atanu Chakraborty and mis-selling penalties involving AT1 bonds. They see a core franchise that is still delivering an ROA of 1.8%.
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The Bear Case
Axis Securities dropped the stock today and opted for Kotak Mahindra Bank instead. The move suggests domestic fund managers are wary of range-bound behavior and the ongoing churn in top management.
The bank has recently penalized 12 senior executives for lapses in bond sales. The market is still digesting the former Chairman’s public remarks about "mismatches in ethics and values" at the bank.
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With the stock hitting a 52-week low of ₹726.65 earlier this week, all eyes are now on the April 18 Board Meeting. Traders expect this split in brokerage sentiment to trigger high volatility when markets reopen on Monday.