HDFC Bank Q4FY21 - Above Expectations
Positives
Reserve Bank of India - Notifications.
Does the bank hold a separate call for foreign investors? Was surprised at Saturday’s call - hardly 20 minutes of Q & A session. And the timing too seemed eminently unsuitable for FIIs - it would have been Saturday 7:30 AM at that time in New York. Surprising for India’s leading bank and one that is listed on NYSE and 40% foreign owned.
This is how I understand the results (standalone only - consolidation will make a marginal difference) -
Standalone numbers as below:
Key Notes:
Note-6 Excerpt: … Given that the current “second wave” has significantly increased the number of COVID-19 cases in India and uncertainty remains, the Board of Directors of the Bank, at its meeting held on April 17, 2021, has considered it prudent to currently not propose dividend for the financial year ended March 31, 2021. The Board shall reassess the position based on any further guidelines from the RBI in this regard.
Note-11 Excerpt: … If the Bank had classified borrower accounts as NPA after August 31, 2020, the Bank’s proforma Gross NPA ratio and proforma Net NPA ratio at December 31, 2020 would have been 1.38% and 0.40% respectively. Pending disposal of the case, the Bank, as a matter of prudence, had made in respect of these accounts a contingent provision, which was included in ‘Provisions (other than tax) and Contingencies’.
Disc: Invested and have done transaction in last 4 weeks
Invested.
Here are the latest numbers (including FY21 financials).
| Year | EPS | EPS increase | Book value per share | Book value increase | Price (low) | Price | Price (high) | P/B (low) | P/B | P/B (high) | P/E (low) | P/E | P/E (high) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| FY1996 | 0.10 | 1.11 | 3.24 | 2.92 | |||||||||
| FY1997 | 0.20 | 95.19% | 1.22 | 9.91% | 4.52 | 3.70 | |||||||
| FY1998 | 0.32 | 55.67% | 1.43 | 17.21% | 7.08 | 4.95 | |||||||
| FY1999 | 0.41 | 30.38% | 1.69 | 18.18% | 6.92 | 4.09 | |||||||
| FY2000 | 0.59 | 43.93% | 3.09 | 82.84% | 25.72 | 8.32 | |||||||
| FY2001 | 0.86 | 45.70% | 3.75 | 21.36% | 22.84 | 6.09 | |||||||
| FY2002 | 1.10 | 27.43% | 6.90 | 84.00% | 23.66 | 3.43 | |||||||
| FY2003 | 1.38 | 24.89% | 7.96 | 15.36% | 23.46 | 2.95 | |||||||
| FY2004 | 1.80 | 30.55% | 9.45 | 18.74% | 23.10 | 37.88 | 40.65 | 2.44 | 4.01 | 4.30 | 12.87 | 21.10 | 22.65 |
| FY2005 | 2.29 | 27.69% | 14.59 | 54.32% | 25.60 | 57.36 | 62.85 | 1.76 | 3.93 | 4.31 | 11.17 | 25.03 | 27.42 |
| FY2006 | 2.79 | 21.82% | 16.92 | 16.03% | 44.80 | 77.43 | 81.20 | 2.65 | 4.58 | 4.80 | 16.05 | 27.73 | 29.08 |
| FY2007 | 3.63 | 29.98% | 20.14 | 19.01% | 61.50 | 95.42 | 116.00 | 3.05 | 4.74 | 5.76 | 16.95 | 26.29 | 31.96 |
| FY2008 | 4.62 | 27.36% | 32.44 | 61.05% | 89.50 | 133.13 | 182.50 | 2.76 | 4.10 | 5.63 | 19.36 | 28.80 | 39.49 |
| FY2009 | 5.29 | 14.34% | 34.43 | 6.14% | 77.40 | 97.34 | 160.00 | 2.25 | 2.83 | 4.65 | 14.65 | 18.42 | 30.27 |
| FY2010 | 6.76 | 27.83% | 47.22 | 37.15% | 99.25 | 193.35 | 199 | 2.10 | 4.09 | 4.21 | 14.69 | 28.62 | 29.46 |
| FY2011 | 8.50 | 25.84% | 54.99 | 16.45% | 178.5 | 234.59 | 254 | 3.25 | 4.27 | 4.62 | 21.00 | 27.59 | 29.88 |
| FY2012 | 11.06 | 30.03% | 64.37 | 17.05% | 200.1 | 259.93 | 269.95 | 3.11 | 4.04 | 4.19 | 18.10 | 23.51 | 24.42 |
| FY2013 | 14.25 | 28.86% | 77.00 | 19.62% | 241.1 | 312.68 | 352.75 | 3.13 | 4.06 | 4.58 | 16.93 | 21.95 | 24.76 |
| FY2014 | 17.74 | 24.50% | 92.05 | 19.55% | 264 | 374.4 | 380.35 | 2.87 | 4.07 | 4.13 | 14.89 | 21.11 | 21.45 |
| FY2015 | 21.08 | 18.83% | 125.98 | 36.86% | 353.65 | 511.35 | 554.65 | 2.81 | 4.06 | 4.40 | 16.78 | 24.26 | 26.32 |
| FY2016 | 24.42 | 15.87% | 146.95 | 16.65% | 464 | 535.58 | 564 | 3.16 | 3.64 | 3.84 | 19.00 | 21.93 | 23.10 |
| FY2017 | 28.59 | 17.08% | 179.11 | 21.88% | 521.4 | 721.28 | 739.95 | 2.91 | 4.03 | 4.13 | 18.24 | 25.23 | 25.88 |
| FY2018 | 33.88 | 18.50% | 211.17 | 17.90% | 712.5 | 943.05 | 1007.5 | 3.37 | 4.47 | 4.77 | 21.03 | 27.84 | 29.74 |
| FY2019 | 39.33 | 16.07% | 282.14 | 33.61% | 930.15 | 1159.45 | 1166 | 3.30 | 4.11 | 4.13 | 23.65 | 29.48 | 29.65 |
| FY2020 | 49.70 | 26.38% | 321.63 | 14.00% | 738.75 | 861.9 | 1305.5 | 2.30 | 2.68 | 4.06 | 14.86 | 17.34 | 26.27 |
| FY2021 | 57.74 | 16.18% | 380.62 | 18.34% | 826.1 | 1494.4 | 1641 | 2.17 | 3.93 | 4.31 | 14.31 | 25.88 | 28.42 |
At current price of 1440, trailing P/B ~ 3.79 and P/E ~ 24.94.
Disclosure: Invested (position size here)
While Marcellus are known for marketing their holding, this is good article from Saurabh M.
Discl - invested in HDFC Bank and Kotak Bank.
RBI imposes a 10 cr. fine (largest ever fine) for irregularities in HDFC bank’s auto loan division. HDFC bank had previously investigated this issue and found misconduct from some employees, 6 of whom were subsequently fired.
Disclosure: Invested (position size here)
Hi
Came across this article on BQ
I was aware from linkedin that they are setting up a separate team for all the tech troubles they have landed themselves into and a future roadmap. If I look at it positively the intent and effort is in the right direction, from a negative lens I hope this is not too late.
Aside the rumoured partnership with the Turakhia brothers is something I will watch very closely. They have been one of the best entrepreneurs of the country in my books.
Rgds
Deepak
Disc: continue to be invested
Interesting article on long term planning of HDFC Bank to address recurring IT problem
A dividend of Rs. 6.50 per equity share of face value of Re.1/- each (i.e. 650% on face value) out of the net profits for the year ended March 31, 2021, has been recommended.
The record date has been fixed as June 30, 2021.
discl - invested.
Why is the bank buying the Insurance company? What is the synergy here and that too buying just 5% stake?
Invested
Most probable reason seems to be upcoming IPO of HDFC Ergo
02 intrsting updates from the bank.
Disc : Invested.
Is it likely to be true for HDFC Bank?
All along we knew, its pathetic IT System Will hv hundreds of restrictions of what u can do/ for what period you can get data and which format and at what time. They are more clear about what you can not do. They were blind to their obsolete IT system design. I also use ICICI and hdfc bk is way behind. Only reason we stick is perceived sense of security.
But now u see their IT bugs coming out of cup board.
I had worst experience when their IT system was down and branch just cant help for cash deposit. Other branch will levy non home branch charges. And no one can help customer even when problem is their side. I mentioned same in this forum earlier.
All such things at times go under carpet with charismatic leader at helm. Just one possibility.
It may not go down but may definitely loose its mojo.
GM is another example.
Hi @us121
There was an article today in Business Line.
A bank of HDFC’s caliber should not be in the top of outage list. Though I am not an HDFC bank customer I understand the frustration of tech glitches. Aside I am very surprised to see ICICI bank at #3.
Rgds
Deepak
Disc: invested. not a registered analyst/adviser
