HDFC Bank falls 2% after Sukthankar quits; move paves way for external candidate as MD & CEO, say brokerages

Shares of HDFC Bank were down around 2 percent on Monday morning, following an abrupt resignation by Deputy MD Paresh Sukthankar last week.

It has touched an intraday high of Rs 2,101.85 and an intraday low of Rs 2,075.00.

Global research firm Nomura believes that the exit is a small, near-term negative and that the potential MD&CEO candidate could be an outsider now.

It also highlighted that timing of this & notice period of 3 months matches with change in guard at Axis Bank. It reiterated that the speculation in market is also pointing towards that. Should this event take place, there could a rerating on Axis Bank.

Meanwhile, Citi said that some investors could show concern as the development has come around the QIP issue. Puri had indicated in analyst meet in 2018 that external & internal candidates will be considered, the report highlighted.

Macquarie, on the other hand, said that the early resignation has come in as a surprise. At the margin this development is negative, it said, adding that the bank will manage the challenge well. It also believes that Sukthankar will be a good fit for Axis Bank.

HDFC Bank, on Friday, announced the resignation of Sukthankar in its exchange filings. The resignation will be effective after three months.

Sukthankar has been with HDFC Bank since its inception in 1994. He was promoted to Deputy MD from executive director in March 2017.

Prior to joining the bank, Sukthankar worked in Citibank for around 9 years, in various departments including corporate banking, risk management, financial control and credit administration. He has been a member of various Committees formed by Reserve Bank of India and Indian Banks' Association.

Sources told CNBC-TV18 Sukthankar resigned for personal reasons and reportedly told the senior management he wanted ‘a change’ from current responsibilities. He is unlikely to join a rival like Axis Bank, they said.

The bank reportedly wanted Sukhthankar to stay on and tried to persuade him to rethink his decision. However, Sukhthankar chose to step down.