As per latest report in many news papers, more than 20% to 25% Jan Dhan accounts are non operational. Probably those were opened some time back but never used.

I personally believe that, there is huge population growth which will happen in next few decades, and more population will need to still open Bank accounts. With per Capita income in India at 2500 USD (number looks inflated to me!) as per some recent news, there is immense scope that this will slowly go up as well.

HDFC Bank may surprise all of us by growing at reasonable rate for another 10 years, and with Valuations moving toward its Mean which is above 4.0 P/B, there is enough scope for the stock to grow.

Companies which are 10-15 Lakh crore in Market Cap today can still become 2-3 baggers going forward, if the economy grows from current levels to about 10-15 Trillion Dollars. Our large caps are equivalent to Mid Caps of USA / China, so I do not think that, Large caps can not grow.

Many large caps have still potential to become Mega large caps.

Disclosure Holding HDFC Bank since 2011. Booked profits from time to time but planning to hold for more time. My views may be biased.

We have to take this with a pinch of salt. The average age of Indian population is still below 40 and if very house hold is a 3 to 4 member family, most kids definitely will not have a bank account

Secondly most Jandhan accounts will have zero money and they will queue immediately to withdraw anything deposited through various government schemes

CASA and the average money per account can be a good metric

As the standard of living and per capita increases this will naturally go up

Think about the rising income level of Indians which contributes to the deposits. Spending/Premiumization, need to buy homes etc will be more as the income grows. So banks will continue to rise.

In future if more profit can be used for buybacks etc then share price will be automatically taken care.

This is from 2017-18, at 80%; you will find news reports with varying numbers but it has crossed 90% which is why fintech firms are the rage now. Also UPI numbers.

On May 19, 2023, the company had approved the issuance of warrants convertible into equity shares. As per BSE’s shareholding pattern, upon conversion of the said warrants, the promoter holding would increase to 35.18% (current: 28.56%).

Seems like a positive step towards increasing their skin in the business.

Link: https://www.bseindia.com/xml-data/corpfiling/AttachHis/509c91de-2b15-4700-9fbb-7fb557721013.pdf

However, couple of pointers to keep in mind:

1. In the 3 concalls that they have done, twice the promoters have promised higher growth figures than they have managed to achieve.

June 2023

November 2023

2. As per the FY23 annual report, Frog Data currently contributes 20% to the topline, however, it contributes only 10% to the PAT, as it has lower margins (NPM of 5.8%). This will be a key monitorable.

3. The company is not paying substantial tax as of now, and as per the management they have another 2 years of tax shelter left. Post that, the net profit will have an impact.

However, the company is currently at INR 300 cr market cap, with a P/E of 12-13x (vs median Industry P/E of ~40x) and they have guided 25-30% growth this year for IZMO Ltd.

Frog Data contributes to ~25% of sales (as of H1-FY24), and if they manage to raise private capital in Frog Data at INR 650-800 cr valuation ($80-120 million) as suggested by the promoter, the rest 75% of the business would effectively be available to the shareholders for free. (the deal is expected to be closed by March’24 as per the management).

Disc: Tracking