Name: HDFC Bank
Ticker: $HDB
Price: 63
P/B: 3.56
Sector: Banks
Disclaimer: I am not buying right now, but I do have a small position at an average of $53.74 per share.
HDFC Bank is the 2nd biggest bank in India (overtaken by SBI in June) , with revenues of 12.8B per year and a market cap of 100B.
HDFC pays dividends of $0.58 per share annually.
The bank has a NPA ratio of just 1.26% compared to India's average of 5.9% – That is a great ratio. Additionally, the Bank's revenue grew at a 12% CAGR over the last 5 years. That is great for a bank so big.
I am bullish on HDFC Bank due to India's rapidly growing population & economy, but am wary of taking a large position as India is an emerging market and that adds a layer of risk, although it seems HDFC Bank is a lot better at managing risk compared to its peers. HDFC Bank is merging with its parent, HDFC. This creates even more opportunity for HDFC Bank to capitalize on India's growing economy, mainly through home finance opportunities.
HDFC Bank isn't really cheap right now, which is why I'm not buying, although I think it's a great business.
A financial crisis in India is obviously a massive risk as HDFC Bank is not diversified outside of India, but i am positive that HDFC would be able to benefit from that by capitalizing on competitors mistakes, especially considering how high the NPA of its competitors are, even in economically good times.
HDFC Presents an intriguing opportunity to diversify outside of the US, at the same time as capitalizing on a growing economy.
Cross-post from r/HoldForeverInvesting
Leave a Reply