Thanks for starting this
I will try to put my views in simple way
In any economic crises the stronger players always get benefited as they gain market share due to better balance sheet and past prudent lending and competitors are in distressed
Now two important point I like to highlight which really affect the valuation
1 Market share of HDFC Bank in total indian bank advances , it’s only 8.58% …so opportunity size is still big even after 24 years of business and at 6.5 lack CR market cap
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Reinvestment Rate what I realised that for successful compunding business opportunity should be large scope for reinvestment should be there, HDFC Bank has roughly 81% reinvestment Rate
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Intangible assets. That’s where HDFC culture comes to play like Lending discipline and Focus on profitable growth (not just growing) and Brand building
Now if you think that why I am not worried about few quarters slow down …(I feel there maybe opportunity) Probably I am bias
Because I hold HDFC Bank since ipo of 1995 and given me roughly 26 to 27% CAGR
I hold Kotak Mahindra Bank since IPO which has given me around 30% CAGR
I try to value banking by ROE ROA and cost to income ratio ,CASA … I know it’s shortcut valuation so I try to read more and more about how to value banking
Ending with Buffet Quote
The ideal business is one that earns very high returns on capital and that keeps using lots of capital at those high returns. That becomes a compounding machine,”
Thanks
Ashit