The latest trigger has been the sudden resignation of former chairman Atanu Chakraborty, who cited certain “happenings and practices” within the bank over the past two years that were not aligned with his personal values and ethics. The absence of any detailed explanation has only added to the uncertainty.
The bank’s MD and CEO, Sashidhar Jagdishan, said the board had urged Chakraborty to reconsider his decision and clarify his concerns. He also noted that every board member attempted to persuade him to withdraw his resignation or provide more details, but he chose not to do so.
The stock reaction has been sharp. In Friday’s session, the share price fell another 2%, extending losses for a second straight day. On Thursday, the stock saw a steep selloff, with market capitalisation erosion at one point touching around Rs 1 lakh crore. The selloff was triggered by Chakraborty’s resignation and the concerns it raised.
The episode has sparked uncomfortable questions around governance at one of India’s most systemically important financial institutions. Even so, analysts remain largely constructive, with the Street focusing on valuations and long-term fundamentals, even as clarity on the developments remains limited.
Here’s what experts are saying:
Axis Direct has a Buy rating with a target price of Rs 1,020, implying an upside potential of 28% from current levels. The brokerage noted that operationally, the bank continues to deliver on its guidance as it works towards returning to pre-merger levels across key metrics. Execution remains strong, although the stock has already seen significant de-rating and is currently trading at 2.0x and 1.8x FY27 and FY28 estimated ABV, respectively, well below its five-year average. While a re-rating was contingent on improving performance and RoA stabilising near pre-merger levels, the recent developments could delay that process.
Axis Direct added that governance credibility and management stability remain critical, and ambiguity, especially around board-level exits citing values and ethics, could cap near-term upside despite healthy and improving operational performance.Emkay Global Financial Services has also retained a Buy rating with a target of Rs 1,225. It highlighted that interim chairman Keki Mistry’s remark that he would not have accepted the role at the age of 71 if there were any integrity or governance concerns is reassuring. Following the recent correction, Emkay believes valuations are attractive for a bank nearing a post-merger turnaround. However, it cautioned that the lender needs to rebuild leadership strength and provide clarity on the MD’s term extension beyond October 2026, along with appointing a credible long-tenured chairman, failing which the stock could remain under pressure in the near term.
Nomura has maintained a Buy rating with a target price of Rs 1,080, while flagging near-term concerns around governance uncertainty and limited leadership visibility. The brokerage highlighted key monitorables including the appointment of a permanent chairman, clarity on CEO reappointment or succession, absence of further senior-level exits, and sustained execution post-merger.
At the same time, the bank’s board and management have reiterated that no material issues have been identified. They pointed to strong internal controls, robust audit processes and continued engagement with the Reserve Bank of India as indicators of business as usual. The RBI has also stated that there are no material concerns regarding the bank’s governance or financial position, offering regulatory comfort.
Motilal Oswal Financial Services has maintained a Buy rating with a target price of Rs 1,100, noting that while the developments have weighed on sentiment amid broader macro uncertainty, management reassurance, the appointment of Mistry as interim chairman, and the RBI’s endorsement of governance and compliance standards have helped ease concerns.
The brokerage believes that appointing a new chairman and submitting Jagdishan’s name for the next CEO term, due in October 2026, will be key to restoring investor confidence. It also emphasised that improved operating performance in the coming year will be crucial for the stock’s trajectory, while swift regulatory engagement and interim leadership provide comfort on continuity.
JM Financial has assigned an Add rating with a target price of Rs 1,050. It expects near-term stock performance to remain under pressure as investors seek greater clarity on management and board stability following the episode. The upcoming renewal of the MD and CEO’s term in the next few months could also weigh on sentiment.
For now, investors remain watchful, but are largely placing their trust in the bank’s underlying fundamentals.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)