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HDFC Bank scrip fell in intraday trade on the Bombay Stock Exchange (BSE) after global brokerage firm Bernstein downgraded its stock to underperform due to risks from the coronavirus pandemic.
The bank’s scrip was trading at Rs 882.40 apiece on BSE in late afternoon trade on BSE, down nearly 1.4 per cent.
The stock was earlier rated at ‘market-perform’ by Bernstein. It also cut the target price to Rs 750, from Rs 1,400 earlier.
“In the current pandemic driven environment, we believe HDFC Bank carries certain idiosyncratic risks and unique management challenges,” Gautam Chhugani, analyst with Bernstein said. He also said the bank’s portfolio is most exposed to unsecured consumer credit risk compared to peer private banks.
It also noted that the bank’s succession plan could be a challenge.
“HDFC Bank's impending CEO succession and lack of proactive planning, sets up the bank to lose its sheen with investors who would have preferred less uncertainty,” it said.
Meanwhile, UBS seemed to have more faith in the country’s largest private sector lender but said that a sustained economic slowdown could impact the banking and finance sector including HDFC Bank on several fronts: lead to a slowdown in credit, increase NPL risk, impact fee income, and exert pressure on NIM.
“Management is currently taking steps to minimize impact of COVID-19 virus in branches. Trends in unsecured retail asset quality are stable,” it said in a report on Friday.
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