@Caution_Investor
Hi actually you asked ishu this question but I would like to put my view as well.
I feel in the next 5 or 8yrs most probably ICICI will overtake hdfc bank in market cap terms and become the largest bank in India. Below are the reasons why I think so,
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I have a view that banks which will have more granular advances and more towards retail and MSME will outperform banks who are more towards wholesale. If you see ICICI in last 2 to 3yrs have slowly moved towards retail segment and has been consistently outperforming HDFC bank from last 6 to 10 quarters. Why is HDFC not changing its MIX then?. HDFC is the leader in the wholesale segment and it is extremally difficult for a bank of HDFC size to change its entire MIX. ICICI took 3 yrs and a recent example is yes bank which took 2.5yrs.
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One of the major reason for bank to get better valuation than competitors is PROMOTER. because of UDAY KOTAK kotak bank gets primum valuation. HDFC was getting this because of ADITYA PURI who left the bank.
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Technological advancement is bound to happen in banking over the years. I feel ICICI is ahead of HDFC in terms of technology as well. ICICI is also more innovative and has a better product offering than HDFC bank. Banks who focus more towards retail customers will outperform and ICICI is exactly doing that. Like if you see ICICI mobile banking app is better than HDFC ( you can verify this by their rating in play store or experience yourself), ICICI investment related products are better than HDFC ( ICICI direct),
You can clearly see ICICI last 2yrs stock performance also beats HDFC bank
One last point I would like to add. A bank more towards wholesale is likely to have better financing margins and a bank more towards retail is likely to have better cross selling. If the economy is going to grow and per capta grows then the bank with more retails will have a significant gain in cross selling resulting into more profits.
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