I am not an expert in analyzing Banking/NBFC stocks. That is one of the reason why my portfolio has very less exposure. Few days back, while talking with Vivekji, he explained the business idea behind NBFC and asked me to look at the thread in TED (well, I am yet to look at it, busy reading Buffett’s annual letters). Hence I am using layman term to justify why GRUH should be considered as an investment choice.
1). Promoted by HDFC, india’s leading pvt bank, and possibly most ethical, conservative and consistent financial institution
2). Caters to housing financing. Because of 20% upfront payment requirement, NPA is pretty low at around 0.6%
3). Consistent growth rate of 30%. Achieved 45% growth in disbursement, Consistent ROCE of 25%+
4). Small geographical presense (in Gujarat and Maharashtra mainly), Huge scope of geographic expansion
5). It is a psuedo play on India’s rising middle class. A house is the most expensive investment a middle class usually make.
1). Fairly valued, or slightly over-valued, growth stock (substantially over-valued as compared to its peer, who doesn’t have a HDFC as a promoter), (Again Page, Titan, Bata, Nestle are fairly-valued and still giving good returns)
Please help me by doing a proper analysis of this stock, and giving your views.