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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
Jun 30
Tax Planning is very important to optimize tax outgo!

Hindu Undivided Family(HUF) is a good option that is available for all married persons

What is HUF? How to create it?

A thread🧵on HUF,how to create HUF and its benefits?

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What is Hindu Undivided Family(HUF)?

An HUF, under the Hindu law, is a family consisting of lineal descendants from a common ancestor. It includes their wives and unmarried children.
HUF’ is treated as a ‘person’ under section 2(31)​ of the Income-tax Act, 1961 (herein after referred to as ‘the Act’).

HUF is a separate entity for the purpose of assessment under the Act.
Read 19 tweets
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🚨How to buy health insurance- A checklist

Health insurance policies come with 100s of variations & are very complicated🤯🤯

Which conditions should u keep in mind before buying a health insurance policy?🤔🤔

A thread🧵 on a comprehensive checklist of things you should check before buying a health insurance policy

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What is a health insurance policy?

In simple words, you pay a premium to an insurance company.
The insurance company in return will cover the cost of any unforeseen hospitalization

Almost everyone should have personal health insurance Image
Which health insurance policy to buy?

Health insurance policies come with 100s of variations such as:-

🩺Some have co-pay
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🩺Some have higher new claim bonus
🩺Some have caps on various things

So which one to buy?
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May 30
🚨 Suzlon- Is the turnaround finally completed?

After decades of Hardships,
Suzlon is reported 67% revenue growth in FY25
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Is the wind energy and Suzlon's business on a massive turnaround?🤔🤔

A thread🧵on the business of Suzlon and what lies ahead?

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The history of Suzlon:-

Suzlon undertook aggressive expansion within the wind energy space.

This led to a massive build-up of debt and after that huge problems for the company

Here is a brief history of the company Image
So what is changing for Suzlon?

A series of steps have been taken by policy makers to reverse earlier policies that hampered wind capacity addition between FY18-FY23.

Policy makers decided to do away with reverse auctions.
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May 27
🥤🥤Water Treatment-The theme of the century?🥤

After a change in strategy,
VA Tech Wabag reported spectacular nos with
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🥤strong cash flows

But are these changes sustainable?🤔🤔

A thread🧵on the business of VA tech wabag & what lies ahead?

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In India,
The
Ministry of Jal Shakti allocated nearly 99500 cr for this.
Other Southeast Asian countries are also investing in this, Image
Most of this market is dominated by Municipalties across the world Image
Read 17 tweets
Aditya Shah Profile picture
May 22
🚨Indusind Bank- Can it get any worse?🤔🤔

As if derivative accounting problems were not enough,

Indusind Bank reported shocking numbers with even more problems:-
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🏦Inflated fee income
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A thread on 🧵on the results of Indusind Bank and what lies ahead?👇Image
What is happening at Indusind bank?

In March,
Indusind Bank reported an accounting error in the derivatives book.
This led to 2000 cr and exit of top management.

That was just the tip of the iceberg,
The stock price has tanked from there

Let's find out more👇 Image
First of all.

Let's break down the current fiasco,

1. Accounting discrepancy in the derivatives book

From 2019,
Indusind Bank did not report losses in the derivatives portfolio,
This lead to massive loss of 1960cr this quarter,

Third party investigation confirms the loss and that this is all of the loss,
It is suspected many insiders were involved in this cover upImage
Read 15 tweets
Aditya Shah Profile picture
Apr 28
🚨IDFC First Bank-Poor Capital allocator?

IDFC First Bank spent
🩺400cr on Indian cricket sponsorship
🩺180cr in dividends
But to fund this
The bank raised nearly 10,000cr in the last 1 year😅😅😅

Now, as NPAs surge,
The bank reported a very poor set of numbers

A thread🧵on the business of IDFC First Bank & what lies ahead?👇Image
What has happened?

From the high of nearly Rs 90,
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The bank is seeing a surge in microlending NPAs,

Lets find out what lies ahead for IDFC👇 Image
Lets first analyse the Q4 results:-

Loan growth:-
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Read 16 tweets

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