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Aditya Shah Profile picture
@AdityaD_Shah
Sep 18, 2023 • 13 tweets • 4 min read • Read on X
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HDFC Bank is continuing to underperform the Nifty!

Is the market worried about how the merged entity will play out?
Is this the 2019 ITC moment for HDFC Bank?

A thread🧵on what lies ahead for HDFC Bank?

Lets go👇 Image
What is happening?

HDFC Bank ever since the merger was announced has continued to underperform the index.

How is the business shaping up?

Lets find out👇 Image
Q1FY24 Results:-

Loan growth:-
🏦The loan growth was at 16%
🏦Missing retail loan growth came back to 18%
🏦Retail to Wholesale mix was at 47:53

Overall steady growth from on the loan side Image
Deposit Growth:-

🏦Overall system deposit growth was at 10-12%
🏦HDFC Bank grew its deposits at 19%
🏦New branches will certainly help the bank ramp up deposits

HDFC Bank is gaining market share in both loan and deposits Image
Cost of funds:-

🏦Cost of funds for the bank is now at 4%
🏦Yield is now at 8.1%
🏦NIMs have stabilized at 4.1% Image
NPAs:-
🏦Gross NPAs rose marginally sequentially
🏦Agri loans continue to be a pain point for the bank
🏦All other loans continue to show stable asset quality Image
Capital Adequacy:-

The bank has a strong Captial Adequacy 18.9%
TIER-1 capital is at 16.9%

With strong profitability, the bank has enough capital for near-term growth Image
So why is the market worried?

RoA and RoE could get hit in the near term as the HDFC book comes with a lower NIM.

This is one of the major concerns for the market.
NIM erosion below 4% is a key concern for the market. Image
Aggressive expansion of branches by HDFC Bank

The bank envisions to be 1-2 km of clients rather than the current 5-6 Km

This could inflate costs for the bank in the near term and needs to be monitored Image
Valuation:-

The bank now trades at historically low valuations of about 3x P/Bx

While this is not cheap,It is the lowest in the history of the bank Image
Conclusion:-

HDFC Bank's business is strong

Strong Loan Growth
Strong Deposit growth
Strong Asset quality
Strong capital

There is nothing to complain about per se

However near term merger concerns with ROE and NIM are something the market is worried about
Keep following me -@AdityaD_Shah as I write daily to make you aware around:
📈Personal Finance
📈Investing
📈Stock Analysis

Go to my profile and hit the bell icon🔔to always stay updated
Disclaimer:-
This is my study
Not an Investment Advise

Please consult your own investment advisor before investing.

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More from @AdityaD_Shah

Aditya Shah Profile picture
Dec 1
🚨Gift City-The path to international investments!

As international investment resumes,
Parag Parekh has just launched an S&P 500+Nasdaq 100 FoF

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What is the minimum investment size?

A thread🧵on PPFAS gift city funds & should u invest thru it?👇 Image
Background:-

The Reserve Bank of India (RBI), in coordination with the Securities and Exchange Board of India (SEBI), has placed overall industry-wide caps on foreign investments by Indian mutual fund houses.

The restrictions, primarily designed to manage foreign exchange reserves and control currency volatility, have currently caused a halt in fresh investments into most international mutual fundsImage
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GIFT City, or Gujarat International Finance Tec-City, is India's first operational smart city and an International Financial Services Centre (IFSC) located between Ahmedabad and Gandhinagar.

GIFT City provides a highly attractive environment for US investment through its International Financial Services Centre (IFSC), which acts as a foreign jurisdiction on Indian soil.Image
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Nov 28
🚨What to do with your LIC policies?

Most households have traditional Life insurance policies with an "Assured Sum of money" from LIC and other insurers

Most do not know what to do with these policies now

A thread🧵 on what you should do with ur LIC Policies?👇 Image
What is life insurance?

A Life Insurance policy provides financial security to the family of the insured, in case of their death during the policy period, and in some cases a maturity benefit to the insured person, after a set period of time.
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There are policies which

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🏦which only provide life insurance(Preotection policies) Image
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Aditya Shah Profile picture
Nov 21
🚨Gift City-The path to internal investments!

As international investment resumes,
Parag Parekh has just launched a PMS for investments to the US.

Who can invest in this PMS?
What is the minimum investment size?

A thread🧵on PPFAS gift city PMS and should u invest thru it?👇 Image
Background:-

The Reserve Bank of India (RBI), in coordination with the Securities and Exchange Board of India (SEBI), has placed overall industry-wide caps on foreign investments by Indian mutual fund houses.

The restrictions, primarily designed to manage foreign exchange reserves and control currency volatility, have currently caused a halt in fresh investments into most international mutual fundsImage
What is GIFT city?

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Aditya Shah Profile picture
Nov 17
Sum Insured=25L
Claim amount-4L

The insurer rejected the claim, stating that excessive drinking is the cause of liver damage!

Can your health insurer reject your claim due to smoking & drinking?(even if u declare it)

A thread🧵on claims due to smoking and drinking in health insurance?

Lets go👇Image
How does smoking and drinking affect your health insurance?

Both smoking and drinking are injurious to health

For Smoking:-
If you smoke more than 6 cigarettes a day no insurer issues a policy.

For Drinking:-
If you drink upto 200ml per week insurers may issue a policy but they may load the premium
Medical Conditions that you may develop:-
1. Lung Cancer
2. All kinds of respiratory problems inclusing asthama
3. Heart diseases
4.Diabeties
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Holding Companies trade at a massive discount of 50-90% to asset value!🤯🤯
What is a holding company discount?🤔

Should a discount be applied to Jio Financials holding in Reliance?🤔

A thread🧵on holding companies &how should u go about investing in holding companies?

Lets go👇Image
What is holding company discount?

A holding company discount means that the Holding company's Market capitalization is less than the sum of investments it holds.

Lets see with an example👇
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2. Bajaj Finserv
3. Bajaj Auto
4. Bajaj holdings

The cumulative value of these holdings is nearly 25,000cr
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🚨Federal Bank-Has it found the right balance?

Led by the KVS Manian,
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The Bank is now raising more than 6000cr for next leg of growth

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What is happening?

After disappointing the investors for 5 years

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Lets analyse the business of Federal Bank Image
On of the biggest Assets,
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