PURI’S IRON HAND LED TO HIGH WEALTH CREATION

The Reserve Bank of India’s (RBI’S) approval of the appointment of Sashidhar Jagdishan as managing director and chief executive officer of HDFC Bank sent the stock up 4 per cent on Tuesday. The lack of clarity on a successor to Aditya Puri, the current MD

& CEO, who will retire in October, was one of the reasons for the recent correction in the stock.

Says Gaurav Dua, head of Capital Market Strategy and Investments at Sharekhan, “Besides the end of the leadership overhang, the positive from this development is the smooth transition given Jagdishan’s long association with the bank.” Though Puri will be leaving when the banking industry is witnessing asset quality pressure due to Covid19, experts do not view this as a major concern.

Says Sanjiv Bhasin, director at IIFL, “Now that the new leadership is confirmed and Jagdishan is a credible banker, we believe the bank’s performance going ahead would remain strong. This is a good entry point for investors.” What offers comfort is the fact that Jagdishan has been a part of HDFC Bank’s success under Puri, say analysts.

On the asset quality front, HDFC Bank’s moratorium proportion is relatively lower (9 per cent of loan book) and overall provision coverage ratio of 149 per cent is also healthy. Also, some segments such as micro, medium and small enterprises, which have been severely hit by the pandemic, could get good support if RBI announces one-time restructuring. Overall, the Street has high hopes from HDFC Bank’s new boss.

On the asset quality front, HDFC Bank’s moratorium proportion is relatively lower