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👇
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👇
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
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
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%
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
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
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.
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
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
🚨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?👇
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.
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?👇
As the world moves towards AI
Generative AI market opportunity is scaling up really very fast
A GPU, or graphics processing unit, is an electronic circuit that's designed to process graphics-related tasks quickly and efficiently:
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
GPUs are designed for parallel processing, which means they can perform the same operation on multiple data values at the same time. This makes them more efficient than central processing units (CPUs), which are designed to handle a wider variety of tasks.
🚨IDFC First Bank-Is the Next HDFC Bank unraveling?
IDFC Bank is one of the most popular Twitter stock
Driven by a sharp rise in microfinance NPA provisions
The bank reported a 53% fall in Net Profit
What is going on at IDFC first bank?
A thread🧵on the results and how the bank is positioned going forward
Lets go👇
Loan growth:-
🏦The Bank reported a loan growth of 21%.
🏦Predominantly a retail asset bank.
🏦Unsecured loans remained 60% of the book.
🏦Credit cards book has started to grow sharply
🏦Home loans are now growing well
Deposit Growth:-
Deposit growth remains robust at 32%.
CASA ratio has now come down to 48.9%
Ramp up of the deposit franchise makes IDFC stronger