HDFC Bank instead of selling it assets is currently planning to increase its stakes in six other banks. Indus, Axis, Bhandan, ICICI ( ), YES, . It baffles me why is the Bank becoming a bank holding company. Do they feel other Banks can grow faster than them and hence spending money in acquiring these stakes will help them?
This contradicts management saying they can grow 20% BTW they feel ROE will come down for sure in the medium term which means EPS will slow down to 15 % to 16% growth.
I believe HDFC was merged to hide some big NPAs in its real estate book and protect the market cap of HDFC, as you know most of the management is compensated via stock as well. Need to dig in Deep.
HDFC bank’s advantage is its corporate book and its underwriting which only keeps it at the fair value of 2 times book.
Right now it is a good bet for 15 % to 17 % CAGR for the next 5 years which is not bad for big mutual funds and people who cannot find better opportunities.
Disc: Started tracker position HDFC bank will wait to pick up more when the upside is higher.Portfolio here
Subscribe To Our Free Newsletter |