HDFC Bank Shares Recover After 1-Year Low; Macquarie Sees 62% Upside

HDFC Bank shares edged higher on Friday, recovering after falling to their lowest level in more than a year in the previous session, as Macquarie retained its ‘Outperform’ rating on the lender with a target price of Rs 1,150.

The brokerage's target implies an upside of nearly 62% from HDFC Bank's Thursday closing price of Rs 712. However, Macquarie flagged uncertainty over the tenure of chief executive Sashidhar Jagdishan as a key near-term overhang for the stock.

HDFC Bank shares were trading at Rs 720.30 in afternoon trade, up 1.31% from the previous close. The stock has fallen 27.9% so far in 2026, sharply underperforming the Nifty 50, which is down 7.8% over the same period. The lender has a market capitalisation of more than Rs 11.01 lakh crore.

CEO Tenure Remains Key Overhang

The recovery came after HDFC Bank shares fell 2% on Thursday and touched a more than one-year low of around Rs 710. The decline followed reports of a lawsuit filed against the bank and some of its executives in the US.

Macquarie said uncertainty surrounding the bank's leadership remains an important issue for investors, with Jagdishan's current tenure scheduled to end on October 26, 2026.

The brokerage sees two possible outcomes, which it currently considers equally probable. HDFC Bank could seek either a six-month extension for Jagdishan or a full three-year renewal of his tenure.

A six-month extension could signal that the bank is considering other candidates for the top job and needs additional time to recommend a successor to the Reserve Bank of India, according to Macquarie.

Such an outcome could prolong uncertainty and potentially put further pressure on HDFC Bank shares, particularly as a new CEO may require time to settle into the role.

Full Extension Could Ease Uncertainty

In contrast, a full three-year extension for Jagdishan would remove the immediate leadership uncertainty. Macquarie believes the stock could find support around current levels in such a scenario, with its subsequent performance increasingly determined by an improvement in the bank's fundamentals.

The brokerage said HDFC Bank's Nomination and Remuneration Committee is expected to evaluate and select a candidate before making a recommendation to the board. The board would subsequently recommend the appointment to the RBI for approval.

Macquarie added that the central bank has recently taken around 30-45 days to approve CEO appointments after receiving recommendations from bank boards.

Margin Compression Another Key Risk

Apart from a temporary extension of Jagdishan's tenure, Macquarie flagged the possibility of further sharp compression in margins as another key risk.

Meanwhile, Puneet Sharma, who has been designated as HDFC Bank's new chief financial officer, is scheduled to join the lender on September 1.

HDFC Bank reported a 5% year-on-year rise in June-quarter net profit to Rs 19,060 crore, while net interest income grew 7% to Rs 33,534 crore. Net interest margin stood at 3.26% on total assets.

Asset quality also improved, with gross NPAs declining to 1.17% of advances from 1.4% a year earlier.