1/n HDFC Bank: Story of 2 analyst reports received today morning.
One from Bernstein with a sell rating & the other from UBS with a buy rating. Target Price 750 & 1480 respectively. Just some personal thoughts now.
One from Bernstein with a sell rating & the other from UBS with a buy rating. Target Price 750 & 1480 respectively. Just some personal thoughts now.
2/n Before we rely on any analyst reports we must look at the stance & history of their previous predictions of the writer. I would not like to proceed further without this know how.
3/n Bernstein (BRNSTN) analyst Gautam is a crypto fan. He believes 'The only real money will in the coming days will be BTC. Rest is just Uncle Sam's printing press'. 
4/n Here he talks about zero reserve & how the money you keep in a bank is not yours but is *all* lent out. In crypto the 'money' he says is *all* yours.
5/n Gautam prefers BTC over banks. Here.
6/n On the other side I just have one small observation about the UBS analyst Vishal Goyal who has a Buy rating on HDFC Bank.
7/n Actually only one line will do - He is the guy who called the bluff on YES Bank years ago. I hope you have read his first publication. That's all there is to say.
8/n BRNSTN says HDFC Bk has is most exposed to unsecured consumer credit risk vs peers.
9/n UBS says 80% of unsecured loans is to salaried majorly comprised of good & strong cos. Both pvt & govt
10/n BRNSTN says their checks indicate that defaults in certain segments such as lower salary & self employed is high. As per UBS this is not the major composition of book as above.
11/n UBS says Repayments continue to be healthy. SME loans are well diversified. Limited exposure to airlines, restaurants & hospitality segments.
12/n Both agree on reduced consumer spending
13/n BRNSTN FY20e EPS: 51.7 FY21e:55.9. UBS FY20e: 46.7 FY21e:55.9. Who is more conservative?
14/n BRNSTN FY20e ROE: 16.8 FY21e:15.8. UBS FY20e: 16.0 FY21e:16.7. Who will be right?
15/ Both estimate FY21e PE as close to 16
16/n BRNSTN calls out concerns in management change & compares in one instance with ICICI bank. So we are comparing ICICI mgmt issue with change of CEO in HDFC Bk? He misses out key external appointments like the new Chief Digital Officer in his table on the key positions.
17/n Who will be proved right? The crypto loving analyst or the one who called the bluffs on YES. I don’t know.
But I don't like crypto as an asset class😉
But I don't like crypto as an asset class😉
