Analysts see no major impact on HDFC Bank Arvind Kapil’s switch to Poonawalla Fincorp

Analysts see this move to be sentimentally negative for the stock in the near-term, but expect smooth transition to override concerns

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Shares of HDFC Bank slipped by nearly a percent to Rs 1,432 per share on March 19 after Group Head Arvind Kapil is set to join Poonawalla Fincorp as its new Managing Director (MD) and Chief Executive Officer (CEO) for a period of 5 years effective June 24, 2024. Analysts see this move to be sentimentally negative for the stock in the near-term, but expect smooth transition to override concerns.

Jefferies, for instance, shared a ‘buy’ call on the stock with a target price of Rs 1,800 per share, saying that Kapil’s resignation could be slightly negative due to his seniority. “The retention and smooth transition of roles would be keenly watched out. A strong talent base will bring comfort to the stock,” they added.

On the other hand, analysts at Nomura were ‘neutral’ on HDFC Bank following this development and shared a target price at Rs 1,625 per share. “We do not expect any material impact on the business owing to this change in senior management. Any similar churn in the senior-management position will be a key watch out in the near-to-medium term,” the brokerage firm added.

ALSO READ: Mutual funds bought HDFC Bank shares worth Rs 8,400 crore in February

Arvind Kapil serves HDFC Bank’s Group Head overseeing the mortgage banking business with a book size of Rs 7.5 lakh crore. Kapil is responsible for managing the entire home loans portfolio, loan against property (LAP), and HDFC Sales Private Limited.

On March 18, Poonawalla Fincorp said that its current MD & CEO Abhay Bhutada is taking early retirement. Since the company’s acquisition in May 2021, Bhutada was spearheading the transformation of the company and was key figure in fast-forwarding the company’s growth.

“Given his leadership, execution skillsand business acumen, Abhay Bhutada has been elevated to Group level and will be taking up strategic and larger role at the Cyrus Poonawalla Group for managing its strategy, investment & finance. He shall continue to be as Non-Executive Director on the Board of Poonawalla Fincorp,” the exchange filing read.

So far this year, shares of HDFC Bank has tumbled over 15 percent, as against 3 percent decline in the Bank Nifty index.

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