HDF Bank Complete Analysis

 In the year 2015, I thought of closing my SB a.c with HDFC bank. Am not a big fan of maintaining too many a/cS with multiple banks. For past few years am a satisfied customer of a large PSU bank and a leading private sector bank. They offer all the banking facilities which I look for.

Coming back to a.c closure, I had to visit HDFC Bank's Chandra layout branch in namma ಬೆಂಗಳೂರು for tendering closurerequest.

Though their service was good and were offering all the facilities viz. Online banking, debit card etc. but still I felt the need of closing the a.c with them. The branch staff who serviced my request pleaded not to close but some how I didn't relent and went ahead with the closure. If I recall, the a.c had balance of somewhere around 20000+. The staff checked with me what is my preferred mode of settlement. Since interbank transfer attracted charges, I requested the staff to settle in cash. They were kind enough to waive a.c closure charges however they also forgot to apply interest till date. Finally the a.c. got closed and they handed over the closure proceeds in cash.

As I was walking out of the branch the question that was lingering on my mind was, what shall I do with this cash? Multiple options crossed my mind ranging from buying new clothes, handing over this cash to my betterhalf as monthly household expense, buying a new audio system for my car etc.

Being an equity market enthusiast, till then I didn't have any exposure to HDFC Bank stock. Was waiting for a right opportunity to lay my hands to HDFC Bank stock. Also I had repeatedly heard from many fundamental analysts/fund managers that there is no right/appropriate time to buy ever shining gems like HDFC Ltd. , HDFC Bank Ltd. Didn't think twice, next day went ahead and bought shares of HDFC Bank Ltd. for an investment amt. of Rs.25000 and allowed it to grow.

Fast forward 2020 despite bank nifty and banking stocks across the board getting hammered on fallback of COVID pandemic, my returns from this investment is 33% CAGR. That is the power of marquee name like HDFC Bank. They are the numero uno private sector bank in India not for one, but for multiple reasons. And their leadership position remains unchallenged over the years.

Be it new customer acquisition, technology adoption, raising low cost deposits, maintaining iron grip on NPAs, maintaining healthy provisions coverage ratio, grooming leaders within the organization, expanding their footprints and many more -they beat their peers hands down.

The future looks promising and runway for growth is tremendous. If India wants to be 5 Trillion economy by 2025, it's no brainer that banking sector will have to do the heavy lifting. I always consider banking as proxy play to India growth story.

There can't be any growth without the participation of banking sector. We've witnessed consolidation in PSU banking space. Similar consolidation in private banking space and NBFC can't be ruled. Whenever this consolidation happens names like HDFC Bank,ICICI Bank,Kotak Mahindra Bank, Bajaj FINANCE, HDFC Limited will be the biggest beneficiaries and these big name will get bigger. It's like men getting separated from the boys.

On fall back of CoVID pandemic and resultant lock down, we witnessed sharp correction in the global markets. India too wasn't an exception. From the lows of March today NIfty is trading at all time high. The recovery or the pull back rally was primarily driven by 2 sectors namely Pharma and IT. Especially banking did not participate in the recovery rally due to fears and concerns of rising NPAs and interest moratorium placed by RBI.

However when the last quarter numbers were announced when the numbers looked better than what was expected, there was sector churning. All the smart money moved towards Banking and NBFC Space. Last two weeks bank Nifty has witnessed one way upward rally. Still the bank Nifty is trading far lower that the highs it made in 2019 before pandemic hit.

There are some very interesting names one can bet on for next 2~3 years. Banks like ICICI Bank, Axis, Kotak, HDFC Bank, HDFC, Bajaj Finance, Federal Bank, SBI, DCB Bank etc.all look promising.

Every correction should be an buying opportunity for long term wealth creation. The risk reward looks favorable. And all these banks are adequately capitalized to fuel the Capex requirements should there be V- shape recovery going forward.

Long term wealth creation through equity investment should be seen as sowing the seed, seeing the greenshoots emerge, enjoying the sight of plant growing, watering it, ring fencing it from animals, feeding it with manure and eventually over a period of time see it grow as one big giant tree. The focus should be on the fruits, it provides season-on-season. Also once in a while you can relax under it, stretch your arms and legs and it's shadow will protect you from sunburn at all times. Ultimately when you pass on the baton to your next generation, default they will enjoy all the benefits you had, all these years. And if they plan to construct their dream villa, then at their own peril they can take a call to cut the tree for it's high quality wood.