HDFC BANK: Buy or Sell Complete Analysis


Hdfc Bank

HDFC Bank is the leading private sector bank in India as per it's market capitalization of Rs 8 Trillion as of April, 2021. HDFC bank was incorporated on August, 1994. Its headquarter is in Mumbai, Maharashtra. It is the subsidiary of Housing Development Finance Corporation with 25.7% stake. HDFC bank offers number of services such as wholesale banking, retail banking, treasury, auto loans, two- wheeler loans, personal loans, loans against property, lifestyle loans, consumer durable loans, credit card etc. In this article we try to find out whether it is good to buy HDFC bank shares or sell it. 

HDFC BANK shares Buy or Sell:

🖥 Table of Contents:

1) Current News:

2) Quarter Four Results:

3) Strength:

4) Opportunity:

5) Targets:

1) Current News:

From last 1 month many HDFC bank customers facing technical glitches while using the banks net banking/ mobile banking facility. 

Hdfc bank apologies

On this HDFC bank management apologies for the  inconvenience of the customers and assured that their technical team is looking on this matter and try to resolve as soon as possible. 

This is not a first time that bank customer facing these problems. The bank is penalized two times by RBI before, one in November 2018 and second in December 2019. RBI also restricts the HDFC bank to issue new credit cards. 

Because of this negative news stock price of HDFC bank falls from Rs 1641 to Rs 1450. Then after the stock is further fall to Rs 1300 range because the news of 15 days lockdown in Maharashtra due to second wave of covid 19.

2) Quarter Four Result:

a) Rise in Revenue & Net Profit:

Hdfc bank q4 results

The interest earned for the period has been increased compare to qoq basis and year on yoy basis. The bank has earned through its lending is Rs 3,042,359 for the period which was Rs 3,007,970 in December quarter and in last year this was just 2988506. 

The revenue from operation for the period is Rs 3801750 which is more than qoq revenue and yoy revenue. 

Whereas total expenditure of HDFC bank is Rs 2248473 which is increased as compare to last quarter but decreased from last year's expenditure. It shows bank has controlled its expenditure.

The Net profit of the bank has increased by 18% from yoy. After Net profit after tax and all adjustments is Rs 818651 in this quarter which was Rs 875829 in last quarter and last year's it was just Rs 692769.

It is also shown in the EPS. EPS for the quarter is 14.9 which was 15.9 in last quarter and 12.6 in last year. 

The banks results are good for yoy basis. 

b) Increase in NPA:

NPA stands for 'Non performing assets' the main source of income for the banks is the interest earned by them from their lendings. When a company defaults its loan with bank , bank declared it as NPA. It is the major aspect to check while fundamental analysis of the bank. 

The NPA'S of HDFC bank increased from 0.36% in March 2020 to 0.40% in March 2021. 

c) CASA Ratio:

CASA Ratio is stands for ' Current Account and Saving Account' Ratio. These two deposits are the good source of income for the banks as bank do not take much efforts relate to these accounts. 

CASA Ratio of HDFC bank is around 46% as on 31st March, 2021 which was 42.2% as of 31st March, 2020.

3) Strengths:

a) Annual net profits is increasing for last 2 years. 

b) Company with zero promoter pledge. 

c) FII / FPI or institutional investors increased their shares in the company share.

Shareholding Pattern of HDFC Bank
Source: Google|Created by Moneycontrol.com

d) Growth in net profit with increasing profit margin quarterly as well as annually. 

4) Opportunity:

Citi bank is going to exit from consumer banking business in India. The consumer banking business includes credit card facility, retail banking and certificate of deposits (CDs). HDFC bank is focuses more on retail banking so it is good opportunity for the bank to grab more and more market share. 


5) Targets:

Many brokering firms have given high targets to HDFC bank shares. 

1) KRChoksey                             Target: Rs 1671

2) Arihant Capital  Markets     Target: Rs 1647

3) Motilal Oswal                         Target: Rs 1720

4) HDFC securities                     Target: Rs 1870

5) Dolat Capital                           Target: Rs 1750

According to my opinion the stock have strong fundamentals and also it is available at low price. You follow the value investing principle by buying good company shares at low price. Also, it is the sector leader, this is the good decision to buy the stock and hold it. In short time I can't say anything but in long run it gives you good returns. 

Closing Thoughts:

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