Group 1 - HDFC Bank is one of the largest private sector banks in India, known for its steady growth and good asset quality over the last 2-3 decades [1] - The bank has consistently demonstrated strong performance, making it a notable player in the Indian banking sector [1] Group 2 - The investment focus is on value stocks that are available at low prices and have potential catalysts in the near future [1] - The investment horizon for these opportunities typically ranges from a quarter to two years [1]

Core Viewpoint - Investors in the Banks - Foreign sector should consider Banco Bradesco (BBD) and HDFC Bank (HDB) for potential value opportunities [1] Group 1: Zacks Rank and Value Assessment - Banco Bradesco has a Zacks Rank of 2 (Buy), indicating a more favorable earnings estimate revision compared to HDFC Bank, which has a Zacks Rank of 3 (Hold) [3] - The Zacks Rank strategy focuses on companies with positive earnings estimate revisions, while the Style Scores system evaluates companies based on specific traits [2] Group 2: Valuation Metrics - BBD has a forward P/E ratio of 7.10, significantly lower than HDB's forward P/E of 21.77, suggesting BBD may be undervalued [5] - BBD's PEG ratio is 0.40, while HDB's PEG ratio is 1.68, indicating BBD's expected EPS growth is more favorable relative to its valuation [5] - BBD's P/B ratio is 0.99, compared to HDB's P/B of 2.81, further supporting BBD's position as a more attractive value option [6] Group 3: Overall Value Grades - BBD has a Value grade of B, while HDB has a Value grade of C, highlighting BBD's superior valuation metrics and earnings outlook [6]

Core Viewpoint - Investors in the Banks - Foreign sector may consider Barclays (BCS) or HDFC Bank (HDB) as potential undervalued stocks [1] Group 1: Zacks Rank and Earnings Outlook - Barclays has a Zacks Rank of 1 (Strong Buy), indicating a positive earnings outlook, while HDFC Bank has a Zacks Rank of 3 (Hold) [3] - The Zacks Rank emphasizes stocks with positive revisions to earnings estimates, suggesting that BCS has an improving earnings outlook [3][7] Group 2: Valuation Metrics - BCS has a forward P/E ratio of 7.76, significantly lower than HDB's forward P/E of 19.73 [5] - BCS's PEG ratio is 0.40, while HDB's PEG ratio is 2.13, indicating BCS may be undervalued relative to its expected earnings growth [5] - BCS has a P/B ratio of 0.61 compared to HDB's P/B of 2.47, further supporting BCS's valuation as more attractive [6] - These metrics contribute to BCS's Value grade of B and HDB's Value grade of D [6]

Financial Data and Key Metrics - The company has just declared its Q3 FY 2025 results, indicating a challenging macro environment with tight liquidity conditions and signs of moderating economic activity [4] Business Line Data and Key Metrics - No specific data or metrics related to individual business lines were provided in the content Market Data and Key Metrics - No specific data or metrics related to individual markets were provided in the content Company Strategy and Industry Competition - The company is operating in a challenging macro environment, which may influence its strategic decisions and competitive positioning [4] Management Commentary on Operating Environment and Future Outlook - The management acknowledges the challenging macro environment, including tight liquidity conditions and signs of moderating economic activity, which could impact future performance [4] Other Important Information - The earnings conference call was held on January 22, 2025, with key participants including the CFO and CEO of HDFC Bank Limited [1][2][3] Q&A Session Summary - No specific questions or answers were provided in the content

Q3FY25 Earnings Presentation January 22, 2025 Key performance metrics for Q3 FY25 2 HDFC Bank Presentation Q3 FY2025 ➢ Deposits; average YoY ↑ ₹ 3.36 tn (15.9%) ; EOP YoY ↑ ₹ 3.50 tn (15.8%) ✓ Average deposits QoQ ↑ ₹ 0.99 tn (4.2%) ; EOP QoQ ↑ ₹ 0.64 tn (2.5%) ✓ Average CASA QoQ ↑ ₹ 0.09 tn (1.1%) ; EOP QoQ ↓ ₹ 0.11 tn (↓ 1.2%) ✓ Average time deposits QoQ ↑ ₹ 0.90 tn (5.8%) ; EOP QoQ ↑ ₹ 0.75 tn (4.6%) ➢ AUM; average YoY ↑ ₹ 1.86 tn ( 7.6%) ; EOP YoY ↑ ₹ 1.55 tn (6.1%) ✓ Average AUM; QoQ ↑ ₹ 0.64 tn (2.5%) ...

Core Viewpoint - Investors in the Banks - Foreign sector should consider Woori Bank (WF) and HDFC Bank (HDB) for potential value opportunities [1] Valuation Metrics - Woori Bank has a forward P/E ratio of 3.83, while HDFC Bank has a forward P/E of 21.15 [5] - Woori Bank's PEG ratio is 0.34, indicating better expected earnings growth relative to its price, compared to HDFC Bank's PEG ratio of 1.77 [5] - Woori Bank has a P/B ratio of 0.32, significantly lower than HDFC Bank's P/B ratio of 2.85 [6] Investment Ratings - Woori Bank has a Zacks Rank of 2 (Buy), while HDFC Bank has a Zacks Rank of 3 (Hold) [3] - Woori Bank has shown stronger improvement in earnings outlook compared to HDFC Bank [3][7] - Woori Bank has a Value grade of B, whereas HDFC Bank has a Value grade of C [6]

Company Overview - HDFC Bank Limited (HDB) is experiencing significant attention from investors due to high implied volatility in its options market, particularly the Dec. 20, 2024 $100 Put option [1] - The current Zacks Rank for HDFC Bank is 3 (Hold), placing it in the top 29% of the Banks – Foreign industry [3] Market Expectations - High implied volatility indicates that the market anticipates a substantial movement in HDFC Bank shares, potentially due to an upcoming event that could lead to a significant price change [2][4] - Over the last 60 days, one analyst has raised earnings estimates for the current quarter from 49 cents per share to 74 cents, with no analysts lowering their estimates [3] Trading Strategies - Options traders often seek out options with high implied volatility to sell premium, a strategy that can capture decay and reduce risk if the underlying stock does not move as much as expected [4]

Group 1 - The newly formed HDFC Bank has become India's largest private sector banking group by assets following its merger with its parent company HDFC [1] - The merger includes subsidiaries in insurance, brokerage, and asset management, indicating a diversified financial services approach [1] - There is a cautionary note that big mergers are not always accretive, suggesting potential challenges or risks associated with the merger [1]

HDFC BANK Q2FY25 Earnings Presentation October 19, 2024 Key performance metrics for Q2 FY25 | --- | --- | --- | |-------|-------|---------------------------------------------------------------------------------------------| | | | | | | ➢ | Deposits; average YoY ↑ ₹ 3.15 tn (15.5%) ; EOP YoY ↑ ₹ 3.27 tn (15.1%) | | | | ✓ Average deposits QoQ ↑ ₹ 0.71 tn (3.1%) ; EOP QoQ ↑ ₹ 1.21 tn (5.1%) | | | | ✓ Average CASA QoQ ↓ ₹ 0.02 tn ( ↓ 0.3%) ; EOP QoQ ↑ ₹ 0.20 tn (2.3%) | | | | ✓ Average time deposits QoQ ↑ ₹ 0.7 ...

Financial Data and Key Metrics Changes - The profit after tax grew to INR 16,800 crores, reflecting an optical growth rate of 5.3%, but an adjusted growth rate of 17% when accounting for bond gains and tax adjustments from the previous year [5] - The average assets under management increased by approximately 10.2% year-on-year, with stable margins reported at 3.46% [5] - The gross non-performing assets (NPA) remained stable at about 1.4%, with gross slippages at 1.2%, which is an improvement compared to the same period last year [5] Business Line Data and Key Metrics Changes - Fee income reached INR 8,000 crores, growing by 17% year-on-year, with third-party product distribution growing by 32% [7][8] - Retail loans grew by 11.7% year-on-year, while non-mortgage retail loans grew by 11% year-on-year [18][25] - Priority sector loans grew by 4% sequentially, indicating a growth rate of 16% to 20% [18] Market Data and Key Metrics Changes - Deposit growth averaged around 15% year-on-year, with retail branches contributing approximately 84% of total deposits [4] - The liquidity coverage ratio (LCR) increased to 128, up from 123 in the previous quarter, driven by an increase in granular retail deposits [35] Company Strategy and Development Direction - The company aims to reduce the loan-to-deposit (LDR) ratio to the mid-80s over the next two to three years, adjusting its strategy based on credit growth and deposit growth rates [16][20] - The management emphasized a focus on maintaining asset quality while preparing for potential changes in the credit environment over the next few years [20][42] Management's Comments on Operating Environment and Future Outlook - The management noted an improvement in liquidity but acknowledged that deposit rates remain elevated, impacting credit growth [3] - There is a cautious optimism regarding the future credit environment, with the management expressing confidence in their positioning to capture growth when the cycle turns positive [41][42] Other Important Information - The company is preparing for the IPO of HDB Financial, which is required by regulatory guidelines by September 2025 [12][14] - The management highlighted that the draft regulations from the RBI are still under review, and feedback has been provided [12][37] Q&A Session Summary Question: Is there any securitization income in fees? - The fee income grew by 17% year-on-year, with strong growth in third-party products, but securitization income is not included in fees [7][8] Question: What is the status of contingent provisions? - There was a release of contingent provisions due to regulatory clarifications, which allowed for a reduction in previously reserved amounts [10] Question: What is the impact of RBI's draft circular on HDB Financial? - The management stated that the draft is still under review, and they will provide feedback before the final guidelines are issued [12] Question: What is the trajectory of the liquidity coverage ratio? - The LCR has increased to 128, driven by more granular deposits, and the management is monitoring the situation closely [35][36] Question: What are the thoughts on credit quality? - The management expressed confidence in their asset quality, stating they are well-positioned to manage risks and capture growth opportunities [41][42]