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Hdfc Bank Limited (HDB)
NYSE:HDB
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Hdfc Bank
(NYSE:HDB)
73Outperform
Positive Factors
Credit quality
The bank's strict underwriting process results in superior credit quality compared to its peers, contributing to a resilient growth path.
Investment recommendation
The bank is rated a BUY with a target price of USD74, trading at a premium justified by its promising ROE growth trajectory.
Synergies from merger
More synergies from merger with HDFC Limited are expected to outweigh execution risks, enhancing the ability to tap into lower cost funding and an enlarged network for cross-selling products.
Negative Factors
Asset quality
Asset quality deteriorated as the gross NPA ratio rose to 1.42%, indicating a slight decline in asset quality.
Loan growth
Loan growth was softer at 1.3% QoQ led by a decline in the wholesale book and the bank's focus on bringing down LDR.
Net Interest Margins
Net Interest Margins were maintained at 3.65%, which was a slight miss compared to expectations of gradual improvement.
Hdfc Bank (HDB) vs. S&P 500 (SPY)
Market Cap
$162.30B
Dividend Yield0.9%
Average Volume (3M)2.66M
Price to Earnings (P/E)20.1
Beta (1Y)0.42
Revenue Growth37.85%
EPS Growth0.54%
CountryUS
Employees213,527
SectorFinancial
Sector Strength81
IndustryBanking
Share Statistics
EPS (TTM)3.28
Shares Outstanding2,550,640,100
10 Day Avg. Volume2,794,302
30 Day Avg. Volume2,659,507
Financial Highlights & Ratios
PEG Ratio37.02
Price to Book (P/B)N/A
Price to Sales (P/S)6.82
Price to Cash Flow (P/CF)N/A
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$74.00Price Target Upside10.70% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering1
Hdfc Bank Business Overview & Revenue Model
Company DescriptionHDFC Bank Limited (HDB) is one of India's leading private sector banks, headquartered in Mumbai, Maharashtra. Established in 1994, it operates in the financial services sector, providing a wide range of banking products and services to individual and corporate clients. The bank's core offerings include retail banking, wholesale banking, and treasury operations, supported by a comprehensive suite of digital banking solutions. HDFC Bank is known for its robust network of branches and ATMs across India, catering to millions of customers with innovative financial solutions.
How the Company Makes MoneyHDFC Bank generates revenue primarily through interest income from its lending activities, which includes personal loans, home loans, auto loans, and credit cards. Additionally, the bank earns non-interest income through fees and commissions from services such as wealth management, insurance, and investment products. HDFC Bank also benefits from its treasury operations, which involve managing its investment portfolio and trading in government securities, foreign exchange, and derivatives. The bank's profitability is further supported by its extensive branch network and digital platforms, which facilitate customer acquisition and retention. Strategic partnerships with fintech companies and adherence to regulatory frameworks also play a crucial role in its revenue generation.
Hdfc Bank Financial Statement Overview
Summary
HDFC Bank demonstrates strong financial health with impressive income growth and solid profitability metrics. The balance sheet is stable with manageable leverage, although vigilance is required due to significant liabilities. Cash flow analysis is limited by missing recent data, but historical trends indicate effective cash management.Income Statement
HDFC Bank shows strong income growth with a robust revenue increase from 2023 to TTM. The Gross Profit Margin and Net Profit Margin are quite healthy, reflecting efficient operations with consistent profitability. The EBIT margin is substantial, indicating solid core operating performance. Revenue growth is notable, suggesting strong business momentum.85
Very Positive
Balance Sheet
The balance sheet of HDFC Bank is solid, with a reasonable Debt-to-Equity ratio showing balanced leverage. The Return on Equity is impressive, highlighting efficient use of equity to generate profits. The Equity Ratio indicates a strong equity base relative to assets, though the high total liabilities could pose potential risks.78
Positive
Cash Flow
HDFC Bank's cash flow situation is mixed. The absence of recent operating and free cash flow data limits the analysis. Historical data show positive free cash flow, but fluctuations in cash flow components suggest potential volatility. The Free Cash Flow to Net Income ratio in the past has been strong, indicating effective cash generation relative to net income.65
Positive
| Breakdown | |||||
| TTM | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 | Mar 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 2.80T | 2.54T | 1.21T | 1.02T | 936.66B | 791.75B | Gross Profit |
| 2.80T | 2.54T | 1.21T | 1.02T | 936.66B | 791.75B | EBIT |
| 1.67T | 1.02T | 661.56B | 518.56B | 439.80B | 365.75B | EBITDA |
| 501.01B | 1.05T | 0.00 | 0.00 | 0.00 | 0.00 | Net Income Common Stockholders |
| 695.80B | 640.62B | 495.45B | 386.00B | 325.98B | 260.27B |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 7.24T | 2.29T | 7.24T | 5.99T | 5.32T | 4.13T | Total Assets |
| 25.76T | 44.12T | 25.76T | 21.11T | 17.98T | 15.96T | Total Debt |
| 3.24T | 7.31T | 3.24T | 2.19T | 1.48T | 1.47T | Net Debt |
| 878.07B | 5.02T | 878.07B | 587.42B | 443.06B | 742.81B | Total Liabilities |
| 22.84T | 36.23T | 22.84T | 18.60T | 15.82T | 14.07T | Stockholders Equity |
| 2.91T | 4.56T | 2.91T | 2.50T | 2.16T | 1.89T |
| Cash Flow | Free Cash Flow | ||||
| 0.00 | 147.83B | 433.58B | 554.69B | 903.97B | 152.89B | Operating Cash Flow |
| 0.00 | 190.69B | 477.20B | 581.02B | 921.78B | 171.18B | Investing Cash Flow |
| 0.00 | 53.14B | -4.39T | -3.30T | -2.52T | -2.15T | Financing Cash Flow |
| 0.00 | 3.35T | 4.17T | 2.91T | 1.92T | 1.85T |
Hdfc Bank Technical Analysis
Positive
66.85
Price Trends
60.82
Positive
62.54
Positive
62.00
Positive
Market Momentum
1.51
Negative
76.83
Negative
96.21
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HDB, the sentiment is Positive. The current price of 66.85 is above the 20-day moving average (MA) of 62.01, above the 50-day MA of 60.82, and above the 200-day MA of 62.00, indicating a bullish trend. The MACD of 1.51 indicates Negative momentum. The RSI at 76.83 is Negative, neither overbought nor oversold. The STOCH value of 96.21 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for HDB.
Hdfc Bank Risk Analysis
Hdfc Bank disclosed 71 risk factors in its most recent earnings report. Hdfc Bank reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Hdfc Bank Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $109.88B | 18.86 | 18.52% | 0.64% | 24.97% | 13.74% | |
75 Outperform | $77.28B | 23.59 | 33.16% | 2.20% | 3.08% | 11.92% | |
73 Outperform | $162.30B | 20.11 | 14.96% | 0.90% | 37.85% | 0.54% | |
68 Neutral | $32.56B | 29.32 | 16.59% | 1.98% | -3.41% | 67.87% | |
64 Neutral | $14.53B | 10.25 | 8.67% | 4.22% | 16.51% | -12.20% | |
43 Neutral | $3.67M | ― | -178.85% | ― | 2.35% | 80.94% |
* Financial Sector Average
Performance Comparison
HDB
Hdfc Bank
66.85
11.43
20.62%
IBN
Icici Bank
31.31
5.09
19.41%
INFY
Infosys
18.67
1.23
7.05%
WIT
Wipro
3.13
0.30
10.60%
RELI
Reliance Global Group
1.26
-4.52
-78.20%
Hdfc Bank Earnings Call Summary
Earnings Call Date: Jan 22, 2025 | % Change Since: 13.57% | Next Earnings Date: Apr 19, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed performance. While the bank showed strong deposit growth and stable credit metrics, it faced significant macroeconomic challenges and pressures on margins and credit costs. The bank is strategically managing liquidity and costs, but external conditions and declining CASA ratios are constraints.Highlights
Strong Deposit Growth
The bank reported a robust deposit growth of about 15%, outpacing loan growth and gaining market share despite challenging macro conditions.
Stable Credit Metrics
Credit parameters like slippages and gross NPA remained resilient and stable, demonstrating the institution's strength.
Strategic Liquidity Management
The bank maintained a near-neutral liquidity position in Q3 with plans to optimize borrowing costs by extinguishing INR 44 billion in bonds.
Continued Branch Expansion
Added over 1,000 new branches year-on-year, maintaining a tight control on costs with a 7% year-on-year growth in costs.
Lowlights
Tight Macro Environment
The bank is operating in a challenging macro environment with tight liquidity, moderating urban demand, volatility, and Indian rupee depreciation.
Reduced Net Interest Margin (NIM) Pressures
NIMs remained stable but are under pressure due to tight pricing and high deposit costs; CASA ratios are also declining.
Higher Credit Costs at HDB Financials
HDB Financials saw a sharp increase in credit costs from 1.8% to 2.5% due to increased provisions and Stage 3 asset classification.
Challenges in CASA Growth
The bank faced challenges in growing CASA ratios, affecting overall margins and cost of funds.
Company Guidance
During the HDFC Bank Q3 FY'25 earnings call, several key metrics and guidance were discussed. The bank reported a robust average deposit growth of about 15%, significantly outpacing its loan growth, which saw an 8% year-on-year increase in AUM advances. Despite a challenging macroeconomic environment marked by tight liquidity, the bank has maintained stable net interest margins (NIMs) and a cost growth of just 7% year-on-year, reflecting continued productivity gains. The bank's credit to deposit (CD) ratio has been a focal point, with ongoing efforts to normalize it, supported by a liquidity position that remained nearly neutral in Q3, with occasional peaks of negative INR 2 trillion to INR 2.5 trillion. The priority sector lending (PSL) targets were met at an aggregate level, though there is a minor shortfall in certain subcategories like smaller margin farmers. The bank's provisioning coverage ratio (PCR) stood at 68% overall but was higher at 71% excluding seasonal agricultural slippages. Additionally, the bank highlighted its strategic focus on maintaining a balanced growth trajectory with sufficient capital to capture market share as the macroeconomic environment stabilizes.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.