Buylyst

Published on 10/15/19 | Saurav Sen | 2,322 Words

The BuyGist:

We had done a full-fledged investment analysis on HDFC Bank in summer of 2018.
At the time, we had rated it as a stock to "Watch" because it was fairly valued.
More than a year later, it seems our thesis has mostly played out as we expected.
That is even more impressive given the scale and frequency of banking crises in India.
We go through these crises and paint a contrast with the HDFC Bank experience since last year.
We will follow this up with a update valuation of the bank.

Why this article?

It has been a while since I’ve done an HDFC Bank update. The primary reason is that we had assigned it a “Watch” rating more than a year ago. And we have been watching it ever since. It’s been quite a ride. For starters, it seems like the Indian Banking industry is in shambles. Every week, there seems to be a headline about massive credit losses triggering bank runs. All this is happening while many “experts” expect the Indian economy’s growth rate to slow down. In this ominous environment, HDFC Bank seems to not just hold steady but actually thrive.

So far, the most gratifying part of it all is that our HDFC Bank thesis has panned out almost exactly as we thought it would. We had rated it a “Watch” last summer. Is it time to change that?

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