Bernstein downgrades HDFC Bank on unsecured credit, succession plans

The brokerage lowered the bank's rating to 'underperform' from 'market-perform' earlier, and lowered target price to Rs 750, from Rs 1,400

HDFC Bank stocks fell after brokerage house Bernstein downgraded the bank on exposure to unsecured consumer loans amid a Coronavirus induced slowdown, and on “non-proactive handling of the management succession so far.”

The brokerage lowered the bank’s rating to ‘underperform’ from ‘market-perform’ earlier, and lowered 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,” wrote Gautam Chhugani, analyst with Bernstein, adding, the bank’s portfolio is “most exposed to unsecured consumer credit risk versus peer private banks.”

The brokerage noted that 24 per cent of