HDFC Bank Stock Research

May 4, 2012

Today we will have a look on HDFC Bank Stock, Started in the year 1994 as a part of RBI’s bank liberalization policy today the company boasts of 2201 branches and 8913 ATMs across 1174 towns of India. It is also the among the top 10 best employers INDIA and has been applauded by receiving many awards including 5 in year 2012 itself.

Showing a ~30% growth on Q.O.Q basis even in the times of high inflation on the domestic front and uncertainties around the world, it wont be wrong to consider it as the unfeigned king in the NIFTY portfolio of any long term investor. The numbers do the talking for it as NIFTY has lost about 6.7% in the past 52 weeks, the bank’s stock has shown a growth by about 19.5 in the same period an outperformance of more than 25%. The FIIs have stuck to it by having 37% holding in it even in this time of net outflow and slowdown of FII investment period. Few countries consider it to be the crown jewel of the bazaar. The stock is like an elephant which dances once in a while, but when it dances everyone notices it. Its PE ratio is about 24.66 but that is also because of the returns it assures to the investors. But it is always better to consider PBV (price to book value) ratio in case of banks which is at 4.96, which might make the investor a little uncomfortable as many banks have PBV around 1. The return is what matters to the investors and that the stock provides aptly.

Under the able guidance of its management whose name is not blemished in any controversy and banks branch network reaching hinterland the banks profit has only one to go and that’s north. Even technology like net banking, card base of 14 million will help it grow. One more factor is the RBIs rate cut to help sustain growth which will help in piling up the loan books of the bank. These indications also help to augur that higher growth trajectory is on the cards. Even the credit rating agencies like the Fitch and CARE have given it AAA rating and a stable outlook.

On the technical side also it has rating A1 by FITCH (short term).Recently it has broken its 52 week high which suggests a further upside. The next target is Rs.635 by Aditya birla money which is bullish about it. Of course the market direction will also influence the direction of the stock but if the stock is right then it will get the right price sooner or later.

Editor:- Rahul [Mr Dependable of NIFTY]

NOTE: The article is based on information based as on 25th April,2012 and we don't take any guarantee about the accuracy. Please invest on your own risk.

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