Why HDFC Bank shares rose 3% today, leading Nifty 50? CEO Sashidhar Jagdishan exit, succession plans in focus

HDFC Bank shares surged nearly 3 per cent in early trade on Monday after the lender said CEO Sashidhar Jagdishan would not seek reappointment when his current term ends in late October. The stock rose to ₹739.75 from the previous close of ₹720.30 before paring gains.

HDFC Bank traded flat in the pre-open session before rising 3%

The stock had traded flat in the pre-open session. HDFC Bank had earlier hit a 52-week low of ₹707 on August 28. On a weekly basis, the stock’s absolute returns were up 0.34 per cent, while it fell 2.23 per cent over one month and was down 26.20 per cent year to date.

At the time of writing, total traded volume stood at 264.19 lakh shares, with a traded value of ₹1,937.67 crore. The bank’s total market capitalisation rose to ₹11.26 lakh crore, while its adjusted P/E ratio stood at 13.85.

Sell quantity outnumbered buy quantity, with total sell quantity at 37,74,957 and buy quantity at 17,04,416.

Sashidhar Jagdishan will retire on October 26, 2026, with the bank accelerating the search for his successor.

Reports suggest that the HDFC Bank board is considering former SBI Chairman Dinesh Khara as the next MD and CEO. The bank is also looking at other current SBI MDs as likely candidates.

Morgan Stanley retained its overweight rating with a target price of ₹1,025. The brokerage said the board had decided to fast-track the selection and appointment of Jagdishan’s successor well within time. It said the CEO reappointment matter had been an overhang on the stock and that a timely conclusion would be key for a return of investor focus to fundamentals.

Morgan Stanley noted that the stock had underperformed year to date, with HDFC Bank down 28 per cent versus a 10 per cent decline in the Sensex and a 2 per cent decline in the Bankex. It also said first-quarter FY27 numbers missed street and investor expectations on NIM, while adding that fundamentals continued to gradually move in the right direction and the stock offered deep value relative to fundamentals and its history.

Macquarie maintained an outperform rating with a target price of ₹1,150. It said the decision by Jagdishan was unexpected, noting that the board had sought to persuade him to continue but he reiterated his intention to step down.

Macquarie said the bank would now fast-track the appointment of a successor, creating a relatively narrow transition window for India’s largest private-sector bank. It added that while Jagdishan’s stewardship included completion of the transformational merger with HDFC, the timing of his departure added a fresh layer of uncertainty when investor confidence was already fragile and post-merger balance-sheet recalibration remained incomplete.

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JPMorgan retained its overweight rating with a target price of ₹990. The brokerage said the development could weigh on the share price in the short term, but an expedited and timely appointment of a new CEO could help reduce the overhang of uncertainty.

JPMorgan also said HDFC Bank’s valuations already factor in a lot, with scope for further de-rating relatively limited. Operationally, it said NII growth revival remained critical to reviving investor confidence.

Nomura retained its buy rating with a target price of ₹950. It said the announcement removed immediate reappointment uncertainty, but the leadership overhang had shifted to the question of who would succeed Jagdishan.

Nomura expects the stock to remain range-bound until there is clarity on the next CEO and the mandate. However, it said a credible successor could become a meaningful rerating catalyst.

Bernstein retained its outperform rating with a target price of ₹1,150. It viewed the development as a net positive, saying it ruled out the more feared scenario of a short, RBI-restricted term and opened a natural opportunity for the incoming leadership to reset the bank’s narrative.

Kotak Institutional Equities retained its buy rating with a target price of ₹1,050. It said HDFC Bank had accelerated its MD and CEO succession process following Jagdishan’s decision to retire in October 2026.

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The brokerage said the merger with HDFC Ltd had strengthened the franchise, while key operating metrics remained below those of best-in-class peers. It added that the next CEO would need strong execution capabilities and a credible roadmap to improve margins and profitability.

IIFL said Jagdishan not seeking reappointment removed the tail risk of him getting a truncated tenure by the RBI, which would have prolonged uncertainty and continued to weigh on the stock price. It viewed the development as largely neutral to modestly positive and said it awaited further clarity on the new CEO appointment in the coming months.