FIIs Dump 48 Crore HDFC Bank Shares, Stock Falls 26%
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- FIIs cut HDFC Bank holdings to 44.05% by end-March from 47.67% in December — the third consecutive quarter of overseas selling — with mutual funds absorbing the flow and lifting their own stake from 26.66% to 29.54%
- Atanu Chakraborty resigned as chairman on March 18 citing "incongruence" with the bank's practices, triggering an 8.7% single-day plunge that erased $16.3 billion in market value across three sessions
- Sebi launched a preliminary review of the former chairman's claims and whether other directors failed to document material information, while the Reserve Bank of India said it found "no material concerns on record as regards its conduct or governance"
- Jefferies' Christopher Wood dropped HDFC Bank from both his Asia ex-Japan and global long-only equity portfolios, but the firm's banking analysts Prakhar Sharma and Vinayak Agarwal kept a Buy with a ₹1,240 target, calling it a sector top pick alongside ICICI, Axis and Kotak
- Jefferies values HDFC at 1.6x FY27E adjusted P/B and 13x PE — a discount to large private peers — and forecasts 11% net profit growth in FY26 rising to a 50% ADR climb to $40 by FY28, built on 13% loan CAGR and ~3.5% NIMs
- HDFC Bank carries a 99% loan-to-deposit ratio (Q3 FY26) — among the highest in its peer set — though Jefferies flagged a 116% liquidity coverage ratio as healthy, and warned that board clarity and CEO term rollover are the keys to rerating
Why it matters: For HDFC Bank, the 26% stock fall and FII-to-mutual-fund rotation leave the ₹1,240 Jefferies target — implying 50% ADR upside to $40 — hinging on board-overhang resolution and HDFC Ltd merger synergies. The split verdict inside one firm (Wood out, banking team Buy at 1.6x P/B) shows governance is now the only thing keeping this from rerating.
