Today we're going to take a closer look at Large-Cap Finance company HDFC Bank, whose shares are currently trading at $35.99. We've been asking ourselves whether the company is under or over valued at today's prices... let's perform a brief value analysis to find out!
an Exceptionally Low P/B Ratio but Trading Above Its Fair Price:
HDFC Bank Limited provides banking and financial products and services to individuals and businesses in India, Bahrain, Hong Kong, Singapore, and Dubai. The company belongs to the Finance sector, which has an average price to earnings (P/E) ratio of 15.92 and an average price to book (P/B) ratio of 1.78. In contrast, HDFC Bank has a trailing 12 month P/E ratio of 24.3 and a P/B ratio of 0.1.
HDFC Bank has moved 18.4% over the last year compared to 14.2% for the S&P 500 — a difference of 4.2%. HDFC Bank has a 52 week high of $39.8 and a 52 week low of $28.89.
Strong Revenue Growth and a Positive EPS Growth Rate:
| 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | |
|---|---|---|---|---|---|---|
| Revenue (M) | $8,942 | $10,698 | $11,763 | $13,763 | $22,245 | $25,636 |
| Interest Income (M) | $7,873 | $9,348 | $9,870 | $11,120 | $14,975 | $16,440 |
| Operating Margins | 54% | 56% | 57% | 59% | 38% | 39% |
| Net Margins | 39% | 42% | 43% | 44% | 34% | 31% |
| Net Income (M) | $3,452 | $4,457 | $5,088 | $6,028 | $7,471 | $7,884 |
| Diluted Shares (M) | 5,506 | 5,523 | 5,563 | 5,587 | 7,107 | 7,659 |
| Earnings Per Share | $0.62 | $0.8 | $0.91 | $1.07 | $1.05 | $1.04 |
| EPS Growth | n/a | 29.03% | 13.75% | 17.58% | -1.87% | -0.95% |
| Avg. Price | $55.32 | $49.86 | $71.36 | $58.89 | $67.11 | $36.05 |
| P/E Ratio | 87.81 | 61.56 | 77.57 | 54.53 | 63.31 | 34.33 |
| Free Cash Flow (M) | $2,028 | $12,360 | $7,311 | $5,275 | $11,621 | $13,218 |
| CAPEX (M) | $243 | $244 | $347 | $531 | $646 | $777 |
| Total Debt (M) | $13,616 | $16,062 | $20,487 | $24,996 | $79,779 | $68,666 |
HDFC Bank has rapidly growing revenues and increasing reinvestment in the business, generally positive cash flows, and positive EPS growth. Furthermore, HDFC Bank has decent net margins with a stable trend.
