RESEARCH ANALYSIS
Prepared by
Darshan Patira
To FINLATICS
2020-21
About Company
Registered Address: Lower Parel, Mumbai, Maharashtra – 400013
Phone: 089304 02377
Website: https://www.hdfcbank.com
Key people
Abhay Aima Group head
Aditya Puri CEO & Managing Director
Santosh Haldankar Executive Vice President & Secretary
Srinivasan Vaidyanathan CFO
Bhavesh Zaveri Executive Director
Company’s Background
Industry Banking (Private sector)
House Name HDFC Group
Year of Incorporation 1994
Auditors: MSKA & Associates
Listed on:
Bombay Stock Exchange of India (BSE)
National Stock Exchange of India (NSE)
&
New York Stock Exchange of America (NYSE)
1. General Overview
Summary
HDFC Bank is the largest private sector bank in India. It is the largest bank in India by Market
Capitalization as of 2016. HDFC Bank was incorporated on 1994 in Mumbai. By the year 2019 the
bank's distributions network was at 5,103 branches and 13,160 ATMs across 2,748 cities and towns.
The bank also installed 4.30 Lakhs POS terminals and issued 235.7 Lacs debit cards and 85.4 Lacs
credit card in FY 2017. HDFC Bank is the top 50 most valued global bank in terms of market
capitalization.
History
HDFC Bank limited’ (Housing Development Finance Corporation) was incorporated on August 1994,
with its registered office in Mumbai, India. It commenced operations on 5th January 1995, after
receiving banking license. HDFC was amongst the first to receive an ‘In Principle’ approval from the
Reserve Bank of India (RBI) to set up a bank in the private sector.
On March 14, 1995, HDFC Bank went public with the launch of its IPO (Initial Public Offering).
Merger and Acquisition
In 2000 HDFC Bank merged with the Times Bank and Centurion Bank of Punjab it was the first
merger of two private banks.
Products and services
o Wholesale Banking
o Retail Banking
o Personal Loans
o Credit Cards/Debit Cards
o Treasury
o Vehicle Loans
o Loans against property and much more.
2. Management
Management & Objective
Mrs. Shyamala Gopinath holds a Master’s Degree in Commerce and is a CAIIB. Mrs. Gopinath has 39
years of experience in financial sector policy formulation in different capacities at RBI. As Deputy
Governor of RBI for seven years and member of the Board. Mrs. Gopinath had been guiding and
influencing the national policies in the diverse areas of financial sector regulation and supervision,
development and regulation of financial markets, capital account management, management of
government borrowings, forex reserves management and payment and settlement systems. The
Managing Director, Mr. Aditya Puri, has been a professional banker for over 25 years and before
joining HDFC Bank in 1994 was heading Citibank's operations in Malaysia.
The objective is to build sound customer franchises across distinct businesses so as to be the
preferred provider of banking services for target retail and wholesale customer segments, and to
achieve healthy growth in profitability, consistent with the bank's risk appetite. The bank is
committed to maintain the highest level of ethical standards, professional integrity, corporate
governance and regulatory compliance.
HDFC Bank's business philosophy is based on five core values: Operational Excellence, Customer
Focus, Product Leadership, People and Sustainability
Capital Structure
According to annual report of 2018-19 The authorized share capital of the bank is Rs. 650 Crore. The
paid-up share capital, as on the said date is Rs. 544,66,13,220/- which is comprising of 2,723,306,610
equity shares of face value of Rs. 2/- each.
Shareholding pattern of HDFC
Holder's Name No of Shares % Share Holding
No Of Shares 5483286460 100%
Promoters 1164625834 21.24%
Foreign Institutions 1633956884 29.8%
N Banks Mutual Funds 668590599 12.19%
Central Govt. 10195251 0.19%
Others 174246530 3.18%
General Public 503262491 9.18%
Financial Institutions 300293343 5.48%
GDR 1028115528 18.75%
Financial Analysis
The Company had shown Consistent Financial Performance since last Five years.
Particulars 2015-16 2016-17 2017-18 2019-20
Net Profit 12296 cr. 14550 cr. 17487 cr. 21078 cr.
Balance Sheet 708846 cr. 863840 cr. 1063934 cr. 1244541 cr.
Size
Total Deposits 546424 cr. 643640 cr. 788771 cr. 923141 cr.
Total Advances 464594 cr. 554568 cr. 658333 cr. 819401 cr.
Capital Adequacy 16.79% 14.6% 14.8% 17.1%
Ratio
Gross Non 0.94% 1.05% N/A 1.26%
Performing Assets
EPS 48.8 57.2 67.8 78.6
Statement shows an increase in Profit in Recent years and also tends to expand its business along in
different States and Countries with various kinds of Products and Services.
The EPS (Earning per Share) has increased from (2016) 48.8 to (2019) 78.6
The Company has well diversified product mix, leading player in balancing volumes and market share
with margins and risk.
The Loan Losses is stable for most products and within product pricing parameters.
The Company had maintained its balanced mix between working capital financing, term loans and
trade services.
Company has been maintaining healthy dividend.
3. SWOT ANALYSIS
Strengths: HDFC Bank has the high degree of customer satisfaction when compared to other
private banks. The attrition rate of HDFC is low and its one of the best places to work for in private
banking sector. Superb Performance in New Markets – HDFC Bank Limited has built expertise at
entering new markets and making success of them.
• Strong distribution network – Over the years HDFC Bank Limited has built a reliable distribution
network that can reach majority of its potential market.
• Strong Free Cash Flow – HDFC Bank Limited has strong free cash flows that provide resources in
the hand of the company to expand into new projects.
• Strong dealer community – It has built a culture among distributor & dealers where the dealers not
only promote company’s products but also invest in training the sales team to explain to the
customer how he/she can extract the maximum benefits out of the products.
Weakness: HDFC doesn’t have strong presence in Rural Areas. HDFC lacks in aggressive marketing
strategies like ICICI. The Bank focuses mainly on high end clients. The HDFC Share price are often
fluctuating causing uncertainty to investors.
• Limited success outside core business – Even though HDFC Bank Limited is one of the leading
organizations in its industry it has faced challenges in moving to other product segments with its
present culture.
• Investment in Research and Development is below the fastest growing players in the industry.
• The profitability ratio and Net Contribution % of HDFC Bank Limited are below the industry
average.
Opportunities: HDFC bank has better asset quality parameters over government banks, hence
the profit growth is likely to increase. Greater scope for acquisitions and strategic alliances due to
strong financial position.
• New customers from online channel – Over the past few years the company has invested vast sum
of money into the online platform. This investment has opened new sales channel for HDFC Bank
Limited. In the next few years the company can leverage this opportunity by knowing its customer
better and serving their needs using big data analytics.
• Economic uptick and increase in customer spending, after years of recession and slow growth rate
in the industry, is an opportunity for HDFC Bank Limited to capture new customers and increase its
market share.
Threats: HDFC’s nonperforming assets (NPA) increased from 0.18 % to 0.20%. Though it is a slight
variation it’s not a good sign for the financial health of the bank. The non-banking financial
companies and new age banks are increasing in India. The HDFC is not able to expand its market
share as ICICI imposes major threat.
• Intense competition – Stable profitability has increased the number of players in the industry over
last two years which has put downward pressure on not only profitability but also on overall sales.
• Shortage of skilled workforce in certain global market represents a threat to steady growth of
profits for HDFC Bank Limited in those markets
• Covid 19 emerges as a big threat for every industry and business which has major impact on BFSI
sector.
4. Competitive Analysis
Competitor1. Kotak Mahindra Bank
Competitor 2. ICICI Bank
HDFC Kotak Mahindra ICICI
overview The HDFC Bank is The Bank has four Bank offers a
the leading bank Strategic Business wide range of
in India as Units – Consumer banking products
compared to its Banking, and financial
Competitors; the Corporate services for
management has Banking, corporate and
made their own Commercial retail customers
principles in Banking and through a variety
terms of Treasury, which of delivery
delivering quality cater to retail and channels and
to its customers, corporate specialised
and also customers across subsidiaries in the
maintaining the urban and rural areas of
Stability of India. Company investment
Management. shows very low banking, life,
The company is trend. nonlife insurance,
always under venture capital
trend analysis. and asset
management.
Net Profit 21078 cr. 8607 cr. 3363 cr.
Market Cap 488070.99 cr. 231991.37 cr. 204344.68 cr.
Total Assets 1058910.81 cr. 267392.46 cr. 764459.23 cr.
5. CONCLUSION
• By analysing and comparing all the activities and financial information, HDFC Bank holds greater
no. of Total Assets as well as greater no. of Profit as compared to its Competitors.
• The liability of HDFC Bank is high from its competitors, but might get reduce due to its consistent
and stable profits. • The Earning Per Share is also high as compared to its competitors, which results
in more earnings and strong investors relations.
• By reviewing all information, regarding HDFC Bank, company has performed well since past few
years, company has been maintaining healthy dividend.
• The Company might tend to fall, due to its consistent profit, but due to trend analysis, company
might get higher returns on Trading/Investments.
