HDFCBANK - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 4.0

📊 Core Financials

• Revenue & Profit Growth: Quarterly PAT rose from 18,155 Cr. to 18,641 Cr. (↑ 2.7%), YoY profit variation at 10.8% shows steady growth.
• Margins: ROCE at 7.35% is modest, while ROE at 14.3% indicates healthy profitability.
• Debt Ratios: Debt-to-equity at 6.39 reflects high leverage typical of banking operations.
• Cash Flows: Dividend yield at 1.12% provides moderate shareholder returns, supported by consistent earnings.

💹 Valuation Indicators

• P/E Ratio: 21.4, higher than industry PE of 14.7, suggesting premium valuation.
• P/B Ratio: Current Price / Book Value ≈ 2.9, trading at a fair premium to book value.
• PEG Ratio: 0.97, indicates valuation is reasonable relative to growth prospects.
• Intrinsic Value: Based on EPS (₹46.4) and industry PE, fair value ≈ ₹680–700, below current price.

🏢 Business Model & Competitive Advantage

• HDFC Bank operates in retail and corporate banking, with strong presence in loans, deposits, and digital banking.
• Competitive advantage lies in scale, brand trust, and diversified product offerings.
• Consistent profitability and strong market share make it a sector leader.

📈 Entry Zone & Holding Guidance

• Entry Zone: Attractive between ₹880–920, closer to intrinsic value and DMA200 support (₹961).
• Long-Term Holding: Strong candidate for long-term investors seeking exposure to India’s banking sector, though valuation risk exists.

✅ Positive

• Steady quarterly profit growth (↑ 2.7%).
• Healthy ROE (14.3%).
• DII holdings increased (+0.30%), showing domestic institutional confidence.
• Strong brand and leadership in Indian banking sector.

⚠️ Limitation

• P/E ratio (21.4) above industry average (14.7).
• High debt-to-equity ratio (6.39), though typical for banks.
• ROCE (7.35%) is modest compared to peers.

📉 Company Negative News

• FII holdings reduced (-0.46%), showing declining foreign investor confidence.
• Valuation stretched compared to intrinsic value.

📢 Company Positive News

• Quarterly PAT growth and consistent profitability.
• DII holdings increased (+0.30%), reflecting domestic investor support.

🏭 Industry

• Industry PE at 14.7, lower than company’s valuation.
• Banking sector benefits from rising credit demand and digital adoption in India.
• Sector growth supported by economic expansion and financial inclusion initiatives.

🔎 Conclusion

• HDFC Bank shows strong fundamentals with consistent profitability, high ROE, and sector leadership.
• Valuation is stretched compared to intrinsic value and industry peers.
• Entry recommended near ₹880–920; long-term hold viable for exposure to India’s banking growth story.