57.07 0.00 (0.00%)
After hours: 4:02PM EDT
|Bid||57.03 x 1300|
|Ask||57.02 x 800|
|Day's Range||56.97 - 58.09|
|52 Week Range||43.64 - 65.89|
|Beta (3Y Monthly)||0.22|
|PE Ratio (TTM)||110.28|
|Forward Dividend & Yield||0.32 (0.56%)|
|1y Target Est||71.75|
(Bloomberg) -- All around HDFC Bank Ltd., India’s biggest lender by market value, the news seems to be bad and getting worse: economic growth is slowing, loan losses are rising and shadow banks are mired in crisis.And yet investors keep piling into HDFC Bank’s stock, convinced it will emerge a winner from India’s financial woes. The company’s market value has surged by $21 billion over the past year, more than any other bank worldwide. Among the 25 biggest lenders globally, no other stock commands a higher price relative to earnings or net assets.Bulls say they have good reasons to be optimistic: HDFC Bank will grab market share from embattled shadow lenders and benefit from a flight to quality by investors who’ve grown wary of smaller competitors. While skeptics argue that the bank is vulnerable to India’s economic challenges -- pointing to its large consumer loan exposure and the looming retirement of its longtime leader -- even they say betting against HDFC Bank is risky. Among 54 analysts who cover the stock, only one has the equivalent of a sell rating.“The business continues to perform very well,” said Nick Payne, the London-based head of global emerging markets at Merian Global Investors (U.K.) Ltd., which oversees about $33 billion and has been adding to its holdings of HDFC Bank shares. “Strong banks and franchises tend to get stronger when times get tough, as the weak fall by the wayside.”Read more: India’s Shadow-Bank Bust Has a Lehman EchoIndia’s shadow banks, until recently a growing competitive threat to HDFC Bank and its peers, have been reeling since the latter half of 2018, when a group company of Infrastructure Leasing & Financial Services Ltd. defaulted on its debt and triggered an industrywide credit squeeze. Mortgage lender Dewan Housing Finance Corp Ltd. has missed debt payments since June, while firms including Reliance Capital Ltd. and Piramal Capital & Housing Finance Ltd. have had their credit ratings cut on liquidity concerns.The turmoil has come against a backdrop of five straight quarters of slowing economic growth, the highest unemployment rate in 45 years, and predictions that bad loans at Indian banks will jump to a record 12% by early next year.All the while, HDFC Bank’s stock price has marched higher. Now valued at about $92 billion, the company trades for 24 times projected earnings over the next 12 months. That’s almost three times more expensive than the Bloomberg World Banks Index, within a hair’s breadth of the biggest valuation premium on record. The company’s price-to-book ratio of 4.3 compares with 1.5 at JPMorgan Chase & Co., the biggest U.S. lender by market capitalization.Not everyone is convinced the outsized gains will continue. Gautam Chhugani, an analyst at Sanford C. Bernstein & Co., downgraded HDFC Bank to market perform from outperform on Sept. 9. He cited succession risks around next year’s planned departure of Aditya Puri, who has led the company since 1994, as well as the potential for deteriorating asset quality in the bank’s 4.43 trillion-rupee ($62.5 billion) retail lending portfolio.While HDFC Bank has said loan losses in its retail business have been stable and within expectations, that could change if India’s economic growth and employment trends continue to worsen.Read more: A Third of the World’s Consumers Are Suddenly Nervous to SpendRetail credit costs “are unlikely to remain benign over the medium term,” Chhugani said.HDFC Bank didn’t respond to a request for comment.Optimists draw comfort from the firm’s nearly unmatched track record of keeping loan losses in check throughout multiple economic cycles. HDFC Bank’s per-share book value has grown at a compound annual rate of more than 20% over the past decade, while its gross nonperforming loan ratio of 1.4% at the end of June was the lowest among Indian peers.HDFC Bank is likely to report “strong’” profit growth and stable asset quality for the quarter ended September, Diksha Gera, an analyst at Bloomberg Intelligence, wrote in a report on Friday. As shadow lenders retrench, the bank will pick up market share, said Ross Cameron, the head of Northcape Capital Ltd.’s Japan office. It should also get a boost from a recently announced cut to India’s corporate tax rate.The bank is scheduled to announce its second-quarter results on Saturday. The stock closed 0.5% higher on Monday, after earlier rising as much as 1.8%.“HDFC Bank’s share price is underpinned by its strong earnings growth, which has proven thus far to be fairly resilient” to India’s economic headwinds, said Will Malcolm, a fund manager for emerging market equities at Aviva Investors Asia Pte. He called the stock a “core holding.”“Nothing is forever and we expect volatility in the market,” said Kristy Fong, an Asian equities investment director at Aberdeen Standard Investments in Singapore. “HDFC Bank, however, should continue to be a long-term compounder.”(Updates stock performance in third-to-last paragraph)To contact the reporters on this story: Abhishek Vishnoi in Singapore at firstname.lastname@example.org;Ishika Mookerjee in Singapore at email@example.com;Suvashree Ghosh in Mumbai at firstname.lastname@example.orgTo contact the editors responsible for this story: Lianting Tu at email@example.com, Michael Patterson, Candice ZachariahsFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
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Surprise tax cuts in India fueled the domestic stock markets as well as India stocks and India ETFs trading in the U.S. HDFC Bank stock popped.
MUMBAI/NEW DELHI (Reuters) - HDFC Bank Ltd, the largest private lender in the country, registered a 21% net profit rise for the June quarter on the back of strong retail lending, it said on Saturday. Net profit rose to 55.68 billion rupees ($808.71 million) in the quarter ending June 30, compared with 46 billion rupees in the corresponding quarter last year. The results were in line with market expectations as analysts had expected the bank to clock a net profit of 56 billion rupees for the quarter, Refinitiv data showed.
HDFC, one of the best bank stocks among emerging-market economies, has kept pace with U.S. markets this year and could be at an inflection point.
Indian indexes were the best-performing ones in Asia today. The S&P BSE Sensex gained 0.4% to close at 39,592 while the NSE Nifty 50 gained 0.43% to close at 11,848. Out of the 30 stocks in Sensex, 19 gained, and the remaining lost. With 1.64% gains, HDFC Bank (HDB) was one of the top gainers.
After trading flat on June 19, Indian indexes finally looked up. The benchmark S&P; BSE Sensex gained 1.25%, while the NSE Nifty 50 rose 1.2%. For both of the indexes, most sectors were trading in the green on June 20.
Among top stocks to watch, HDFC Bank is a bit of an anomaly in the financial sector because of solid growth prospects and a bullish chart.
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BENGALURU (Reuters) - Indian shares ended lower for a third straight session on Tuesday, erasing gains in morning trade, hurt by declining financial shares such as HDFC Bank and automobile stocks such ...
Net profit rose 22.6 percent in the fourth quarter through March from 47.99 billion rupees a year ago. HDFC Bank is the first major Indian lender to report results for the final quarter of the year. Net interest income was up 22.8 percent, while the net interest margin was 4.4 percent.
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