HDFC Bank Stock 4 point Analysis

Introduction

Recently, HDFC Bank has come out with few quarterly numbers like CASA, advances, deposits, etc for Q3FY21 and they look quite encouraging. However, the detailed results will be availableonce the bank comes out with its quarterly results.  In this blog, let us analyse HDFC bank based on the latest numbers. 

HDFC Bank – 4 point analysis

Bank Advances :

•      HDFC Bank has tweaked its loan mix in the recent quarters towards corporate loans.
•      Bank registered a 4% growth on QoQ basis and 16% growth on YoY basis in Q3FY21.  

Deposit Book :

•        Despite a tough competition environment, with new banks opening up and offering attractive interest rates on FDs, HDFC bank has fared very well.
•        It registered a strong growth of 19% YoY and  3% sequentially in terms of deposits.   
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CASA Book: 

•      CASA stands for Current and Saving accounts as a % of total deposit accounts. Bank pays lower interest on these accounts. Thus, more the CASA %, better it is for bank as it helps in saving costs and ultimately aids the bank in maintaining its net interest margin.
•      HDFC Bank’s CASA is increasing continuously every quarter from 39.5% in Dec’19 to 43% in Dec’20.
•      Such phenomenal growth in CASA along with strong deposit growth is very encouraging. 

Loans from HDFC Ltd

• HDFC Ltd is the promoter of HDFC Bank Ltd. HDFC Ltd has an agreement with HDFC Bank ,wherein HDFC Ltd sells its loans to the HDFC Bank.
•       Last quarter, HDFC Bank purchased loans to the tune of INR 7,076 crore from HDFC Ltd.
•       This is a win-win situation for both, as it helps HDFC Ltd in sourcing loans at comparatively lower rates and also aids HDFC bank in increasing its loan book.  

•        Bank’s valuation have definitely increased in past few months, however it does not seem overvalued.
•        It is trading fair valuations  given the consistent good performance in each quarter.