HDFC Bank replaces ICICI Bank as top sector pick, says GreenEdge Wealth’s Digant Haria

HDFC Bank has overtaken ICICI Bank as the preferred pick in the private banking space following the appointment of Anup Bagchi, with valuations currently sitting at rock bottom, according to Digant Haria, Founder of GreenEdge Wealth Services

The pecking order among private lenders has completely reversed over the past week. HDFC Bank now claims the top spot, trading at an attractive 1.6 times price-to-book, followed by Kotak Mahindra Bank at 2.2 times and ICICI Bank at 2.5 times. Previously, ICICI Bank served as a safe haven for investors due to its strong execution and expected management continuity, with hopes that the 55-year-old Bagchi would eventually take over and lead for another five years. His transition to HDFC Bank has introduced doubt into that continuity, prompting a shift in market preference.

The leadership change arrives as the government seeks to curb internal infighting at HDFC Bank—evidenced by Rajiv's board appointment—while preserving the institution's private-sector character. Bagchi is viewed as the ideal candidate to steer the ship. "I think we could not have asked for better for HDFC Bank," Haria noted, highlighting that the deposit growth struggles plaguing the lender since its merger are finally concluding.

While the transition may trigger senior-level exits among old-timers over the next three months, the core operations remain insulated because the lender is highly process-driven. The new leadership is expected to attract substantial fresh talent, making any immediate churn mere noise rather than a threat to the clean loan book or intrinsic value.

Bagchi brings extensive experience in retail and small and medium-sized enterprises (SME) banking, having laid the foundational retail structures at ICICI Bank and led ICICI Securities around 2010. Although his corporate banking stint was relatively smaller, establishing governance and stability will allow the lender to become a "growth machine on its own."

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With the sentiment bottom firmly in place, the stock's direction is clearly upward. While the shares could see an immediate 2% to 4% uptick, the broader upward trajectory will take time to materialise due to foreign institutional selling tied to global macroeconomic factors. Once those external pressures subside, investors can expect strong returns over a two-year horizon.

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