The story of HDFC began with the incorporation of ‘Housing Development Finance Corporation Ltd as India’s first retail housing finance company in the year 1977. HDFC Bank Ltd is one of India’s premier banks. Headquartered in Mumbai, HDFC Bank is a new generation private sector bank providing a wide range of banking services covering commercial and investment banking on the wholesale side and transactional/branch banking on the retail side.

What made HDFC such a hot pick amidst most of the Mutual Funds

  • Well, one of the primary factors is a consistent earnings growth of 23 percent and profits growth of 27 percent in the last 10 years with stable margins, low-cost liabilities, and strong asset quality. The return on equity was 18 percent plus for 3-year, 5-year and 10-year periods. No other Indian banks seem to have this remarkable factor. We have got approximately 23% growth in 2019 as well!
  • The stock has risen 1,034.26% during the last 10 years compared to 292% returns given by the Sensex during the same period. In comparison, its closest private sector counterpart ICICI Bank has logged a 472.85% growth in the stock market during the last 10 years
  • Forget about returns, the strong financials of HDFC bank are also sufficient in contributing to the popularity of this stock among market makers and mutual funds! Relative to large Indian Banks, the Non-Performing Assets{NPAs}, NII, and Current Account – Savings Account {CASA} ratio of HDFC is more lucrative. The bank logged a 666.92% growth in its net interest income (NII) during the last 10 years. NII for the fiscal ended March 2018 stood at Rs 40,094 crore compared to Rs 5,227.88 crore for the fiscal ended March 2008.
images (1).png
  • Deposits rose 649% to Rs 7,88,770.64 crore for fiscal ended March 2018 compared to Rs 1,05,247.5 crore for fiscal ended March 2008.Loans and advances grew 937.93% to Rs 658,333.09 crore for fiscal ended March 2018 compared to Rs 63,426.9 crore for fiscal year ended March 2008.

The bank seems to have widened its reach in the market and it’s completely visible by the differences in figures. On Sept. 04, 2017, the Reserve Bank of India (RBI) added HDFC Bank to an elite list of Indian lenders. The 25-year-old organization, India’s second-largest-private-sector lender, is now one of India’s domestic systemically important banks (DSIB).

That means HDFC Bank is now deemed “too big to fail”, and its failure could be catastrophic for the country’s financial system and economy. SBI and ICICI Bank were named to the list in 2015. As a prerequisite, each of the three banks has assets exceeding 2% of India’s GDP.

2020 – Current Consensus Opinion


The bank is likely to continue to accelerate its market share gains While consumption sector-related growth rate has moderated, various levers will help HDFC Bank to deliver superior business growth. The benefit of operating efficiencies, lower tax rate and buffers in P&L would enable the bank to sustain ROAs of 1.9 percent plus

Overall, the ability of HDFC Bank stock to face rough market weather, clean corporate governance practices and logging stellar returns make it a compelling buy among mutual funds.

The constant growth of HDFC banks has no bar and has a high probability to hit more highs because of the strong corporate governance practices and more because of innovative products they launch.