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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
Apr 20
🚨ICICI Bank-The new market leader!

ICICI Bank reported a superb set of numbers!
Led by pristine asset quality,
The results were blockbuster

ICICI Bank has now taken over from HDFC Bank as the true market leader

A comprehensive thread🧵 analyzing the results of ICICI Bank 👇 Image
Credit growth:-

System loan growth at about 10%
🏦Overall loan growth at 13.3%
🏦Retail loan growth at 8.9%
🏦Corporate loan growth at 13.9%

Steady from ICICI Bank Image
ICICI is a Retail Bank now:-

54.3% of the total loan book was retail
the rest 45% was the wholesale book
Read 10 tweets
Aditya Shah Profile picture
Apr 19
HDFC Bank is nearly 11% of the Nifty.
Falling Net Interest Margins have been a big concern for the bank🥲🥲

The Bank has just now posted its results
Is the Bank on the road to recovery?🤔🤔

A short thread🧵analyzing each and every aspect of the HDFC Bank result!

Lets go👇 Image
Advances+Deposit growth:-

YoY numbers are not comparable due to the merger

🚨Advance grew by 5%
🚨Retail loans grew by 9%
🚨Deposits grow by 15%

Loan growth has been slowed down to lower the LDR
Deposit growth is firing up for HDFC Bank!

Loan growth must pick up in the coming quartersImage
The cost of borrowing has come down to 4.9%

HDFC's wholesale borrowing has come down 14%

The bank is doing the right things to bring down the cost of funds, Image
Read 13 tweets
Aditya Shah Profile picture
Mar 11
🚨Indusind Bank(IIB)-Weak internal controls?

As if the surge in microfinance NPAs wasn't enough,

IIB disclosed discrepancies in the accounting of the derivatives portfolio,
This could lead to a loss of up to 2000cr for the bank,

Mr Sumanth Katpalia says:-
RBI isn't happy with him and cut short his tenure
What is happening at IndusInd Bank?

A thread🧵on the business of Indusind and what lies ahead?👇Image
What has happened?

Indusind Bank had asked for a 3 year extension for Mr Sumanth Katpalia,
RBI had only approved a 1 year extension,

Further bank disclosed yesterday,
Discrepancies in derivatives portfolio which could lead a loss of 2000cr,

This at a time when the bank is seeing a surge in the microlending book NPAsImage
Bank disclosed a negative post-tax impact of 2.35% of net worth arising from a markdown on internal derivative trades

These internal trades pertain to 5–7 years up to 31 March 2024 (stopped thereafter).

These were internal FX derivatives on the bank’s FX borrowings (mainly multilateral) and deposits.

The time line is discomforting—the CFO resigned just before the Q3 earnings, the CEO recently got a one-year extension instead of 3
Read 16 tweets
Aditya Shah Profile picture
Mar 10
🚨Specialized Investment Fund(SIF)-Mutual funds with short positions!

SEBI has notified a new category of SIF
This will be a new asset class b/w PMS and Mutual funds,

What are SIFs?
Who can create SIF?

A thread🧵on SIFs and should u invest in them?👇 Image
What are Mutual funds?

A mutual fund is an investment fund that pools money from many investors to purchase securities.
Mutual funds in India are not allowed to take short positions.
They are mostly long-only products,

So SEBI created a new asset class
What is Specialised Investment Fund(SIF)?

The Specialized Investment Fund (SIF) is a new category of investment product introduced by SEBI to bridge the gap between Mutual Funds (MFs) and Portfolio Management Services (PMS).

SIFs aim to provide a middle ground, offering portfolio flexibility while ensuring regulatory compliance and investor protection.
Read 13 tweets
Aditya Shah Profile picture
Feb 3
🚨Term life Insurance-Which is the best term plan to buy?🤔🤔

Term insurance is the only life insurance product to buy!

What is term insurance?🤔
Which companies offer the best term plan?🤔

A thread🧵on what is a term plan and 5 best term plans that u can buy?👇 Image
What is a term insurance?

It’s a pure risk cover that pays the Sum Assured to the nominee of the policyholder in case of death of the life insured during the policy term.

In case the policy member survives till maturity of the plan
There is no payout
For eg:-
Mr X buy a term plan of 2cr till the age of 60

If Mr X dies before the age of 60:-
The nominee will get the sum assured

If Mr X survives thru 60:-
He will not get any money and the premiums become profit of the life insurer.
Read 14 tweets
Aditya Shah Profile picture
Jan 28
🚨E2E Networks-Is the crazy valuation unravelling?

As L&T invested in E2E networks,
The Stock zoomed up and all retail investors got sucked in,

After the company reported its numbers,
The stock is locked in multiple down circuits,

What is happening at E2E networks?

A thread🧵on the business of E2E networks and the way forward?👇Image
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What it does?
GPUs are responsible for rendering images, videos, and animations on your screen. They're also used for other compute-intensive tasks, such as machine learning, video editing, and scientific computations

How it works
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Read 15 tweets

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