- Shares of HDFC Bank, India's largest private sector lender, rose 2.5% Monday after CEO Sashidhar Jagdishan made a surprise announcement about his exit after his term ends in October.
- The hunt for the next CEO formally began on August 29, hours after Jagdishan told the board of his decision to not seek a third term.
- The search for the next chief executive officer seems to have started, with chairman Rajiv Kumar said to be taking the lead in the selection process.
- A list of internal and external candidates has been drawn up by the chairman, in consultation with the nomination and remuneration committee (NRC) members of the board.
- According to Citi and Jefferies, Kaizad Bharucha, the deputy managing director, is the most likely internal candidate to replace Jagdishan.
- The next chief executive will need to accelerate growth, improve deposit mobilization and returns, and rebuild confidence around governance and senior-management stability, according to Nomura.
- Nomura noted that a credible successor could be a meaningful rerating catalyst, but the stock would remain under pressure until clarity on the next CEO and strategic direction.
- The board is committed to appointing a successor to managing director and CEO Sashidhar Jagdishan well before October 26, when his 30-year career is set to end at the bank.
- The chairman and a few members of NRC started engaging with bankers outside HDFC Bank for the MD & CEO role since the start of August.
- Bankers in the NRC's list of preferred candidates include State Bank of India's Ashwini Tewari, Tata Capital's Rajiv Sabharwal, ICICI Bank's Rakesh Jha, ICICI Life's Anup Bagchi, and Aditya Birla Capital's Vishaka Mulye.
HDFC Bank is in search of a new CEO after Sashidhar Jagdishan announced his decision not to seek reappointment, effective October. The bank's shares rose 2.5% following the news, although they have dropped 27% this year compared to an 8% decline in the Nifty 50 index.18
Chairman Rajiv Kumar is leading the selection process, with a list of internal and external candidates being compiled. Kaizad Bharucha, the deputy managing director, is viewed as the likely internal candidate, while other potential candidates include Anup Bagchi of ICICI Pru Life and Paresh Sukthankar, former deputy MD at HDFC Bank.35
Global brokerage Nomura emphasized the need for the new CEO to accelerate growth and improve deposit mobilization, stating, "A credible successor could become a meaningful rerating catalyst." However, they cautioned that the stock may remain under pressure until clarity on leadership is achieved.67
The board is committed to appointing a successor before Jagdishan's term ends on October 26. The search formally began on August 29, shortly after Jagdishan's announcement. The uncertainty surrounding leadership could impact the bank's valuation, according to Jefferies, which maintains a buy rating on HDFC Bank despite the recent share drop.29
As the bank navigates this transition, restoring confidence in governance and senior management stability will be crucial for its future growth.
“Nomura says the next chief must accelerate growth, improve deposit mobilization and returns, and rebuild confidence in governance. Citi and Jefferies see deputy MD Kaizad Bharucha as the front-runner, though he may only get a three-year stint unless RBI changes rules.”
CNBC
