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On 1-Oct-26, the RBI approved the appointment of Anup Bagchi, an ICICI Bank veteran and current MD&CEO of ICICI Life, as the MD & CEO of HDFC Bank for a three-year period starting 27-Oct-26. The approval is broadly in line with market expectations and media reports. We believe the appointment should help restore investor and customer confidence in the bank, given that Bagchi is a banking veteran with experience across diverse responsibilities within the ICICI Bank group. His non-obtrusive leadership style, focus on broader strategic priorities, and aversion to micromanagement should help him carry the core team along, although some churn at the senior management level is possible. Over the coming quarters,

we see key priorities for the new MD as:

1) ensuring stability in the upper management

2) reviving deposit growth

3) improving the productivity of newer branches

4) upscaling technological and digital capabilities to match leading peers

5) strengthening processes to move beyond past issues, including instances of mis-selling. Overall, we believe this appointment should remove the prolonged overhang around management succession and help restore customer and investor confidence in the bank. Given the prolonged underperformance of HDFCB shares, the valuation has become attractive, and the stock should see a sustained re-rating as the new leadership delivers on key priorities and geopolitical uncertainty-led FPI outflows moderate or reverse. We reiterate BUY and TP of Rs1,225 on the stock.

As widely expected, RBI appoints an “outsider” banking veteran

Given the prolonged episodes of minor and major lapses and adverse developments at the HDFC Bank, it was widely anticipated and reported in the media that the RBI is likely to opt for an outsider to lead the bank after the current MD chose not to seek reappointment. In this context, Anup Bagchi’s appointment does not come as a surprise.

Leadership style to carry the existing team together

During his decades of leadership across various businesses within the ICICI Bank Group, Bagchi has come across as a non-obtrusive leader focused on broader strategic priorities, with a strong belief in delegation rather than micromanagement. This leadership style should help him garner strong support from the core team at HDFC Bank. However, some churn cannot be ruled out, as HDFC Bank will, for the first time in its 32-year history, be led by a chief executive from outside the organization.

Progress on business performance should drive re-rating; reiterate BUY

Notwithstanding recent lapses in certain processes and the bumpier-than-expected road following the HDFC merger, the HDFC Bank franchise remains formidable. As the bank begins to deliver on key business objectives, particularly in deposit and credit growth, investor confidence should return. The return of confidence, along with moderation or reversal of FPI outflows as geopolitical uncertainties subside, should drive a re-rating of HDFCB stock, which has de-rated significantly over the past several years. We reiterate BUY on the stock.

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