INTRODUCTION

The Housing Development Finance Corporation Limited (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, as part of the RBI's liberalisation of
the Indian Banking Industry in 1994. The bank was incorporated in August
1994 in the name of 'HDFC Bank Limited', with its registered office in Mumbai,
India. HDFC Bank commenced operations as a Scheduled Commercial Bank in
January 1995.

HDFC is India's premier housing finance company and enjoys an impeccable

track record in India as well as in international markets. Since its inception in
1977, the Corporation has maintained a consistent and healthy growth in its
operations to remain the market leader in mortgages. Its outstanding loan
portfolio covers well over a million dwelling units. HDFC has developed
significant expertise in retail mortgage loans to different market segments and
also has a large corporate client base for its housing related credit facilities.
With its experience in the financial markets, a strong market reputation, large
shareholder base and unique consumer franchise, HDFC was ideally positioned
to promote a bank in the Indian environment.

HDFC Bank's mission is to be a World-Class Indian Bank. 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 four core values -
Operational Excellence, Customer Focus, Product Leadership and People.
CAPITAL STRUCTURE AND MANAGEMENT

As on 30th June, 2010 the authorized share capital of the Bank is Rs. 550 crore.
The paid-up capital as on said date is Rs. 459,69,07,030/- (45,96,90,703 equity
shares of Rs. 10/- each). The HDFC Group holds 23.63 % of the Bank's equity
and about 17.05 % of the equity is held by the ADS Depository (in respect of
the bank's American Depository Shares (ADS) Issue). 27.45% of the equity is
held by Foreign Institutional Investors (FIIs) and the Bank has about 4,33,078
shareholders.

The shares are listed on the Bombay Stock Exchange Limited and The National
Stock Exchange of India Limited. The Bank's American Depository Shares
(ADS) are listed on the New York Stock Exchange (NYSE) under the symbol
'HDB' and the Bank's Global Depository Receipts (GDRs) are listed on
Luxembourg Stock Exchange under ISIN No US40415F2002.
Mr. C.M. Vasudev has been appointed as the Chairman of the Bank with effect
from 6th July 2010. Mr. Vasudev has been a Director of the Bank since October
2006. A retired IAS officer, Mr. Vasudev has had an illustrious career in the
civil services and has held several key positions in India and overseas, including
Finance Secretary, Government of India, Executive Director, World Bank and
Government nominee on the Boards of many companies in the financial sector.

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 Bank's Board of Directors is composed of eminent
individuals with a wealth of experience in public policy, administration,
industry and commercial banking. Senior executives representing HDFC are
also on the Board. Senior banking professionals with substantial experience in
India and abroad head various businesses and functions and report to the
Managing Director. Given the professional expertise of the management team
and the overall focus on recruiting and retaining the best talent in the industry,
the bank believes that its people are a significant competitive strength.
CBoP & TIMES BANK AMALGAMATION

On May 23, 2008, the amalgamation of Centurion Bank of Punjab with HDFC
Bank was formally approved by Reserve Bank of India to complete the statutory
and regulatory approval process. As per the scheme of amalgamation,
shareholders of CBoP received 1 share of HDFC Bank for every 29 shares of
CBoP.

The merged entity will have a strong deposit base of around Rs. 1,22,000 crore
and net advances of around Rs. 89,000 crore. The balance sheet size of the
combined entity would be over Rs. 1,63,000 crore. The amalgamation added
significant value to HDFC Bank in terms of increased branch network,
geographic reach, and customer base, and a bigger pool of skilled manpower.

In a milestone transaction in the Indian banking industry, Times Bank Limited

(another new private sector bank promoted by Bennett, Coleman & Co. / Times
Group) was merged with HDFC Bank Ltd., effective February 26, 2000. This
was the first merger of two private banks in the New Generation Private Sector
Banks. As per the scheme of amalgamation approved by the shareholders of
both banks and the Reserve Bank of India, shareholders of Times Bank received
1 share of HDFC Bank for every 5.75 shares of Times Bank.
BANKING SERVICES

HDFC Bank offers a wide range of commercial and transactional banking

services and treasury products to wholesale and retail customers. The bank has
three key business segments :-

 Wholesale Banking Services

The Bank's target market ranges from large, blue-chip manufacturing

companies in the Indian corporate to small & mid-sized corporates and agri-
based businesses. For these customers, the Bank provides a wide range of
commercial and transactional banking services, including working capital
finance, trade services, transactional services, cash management, etc. The
bank is also a leading provider of structured solutions, which combine cash
management services with vendor and distributor finance for facilitating
superior supply chain management for its corporate customers. Based on its
superior product delivery / service levels and strong customer orientation,
the Bank has made significant inroads into the banking consortia of a
number of leading Indian corporates including multinationals, companies
from the domestic business houses and prime public sector companies. It is
recognised as a leading provider of cash management and transactional
banking solutions to corporate customers, mutual funds, stock exchange
members and banks.

 Retail Banking Services

The objective of the Retail Bank is to provide its target market customers a
full range of financial products and banking services, giving the customer a
one-stop window for all his/her banking requirements. The products are
backed by world-class service and delivered to customers through the
growing branch network, as well as through alternative delivery channels
like ATMs, Phone Banking, NetBanking and Mobile Banking.
 The HDFC Bank Preferred program for high net worth individuals, the
HDFC Bank Plus and the Investment Advisory Services programs have
been designed keeping in mind needs of customers who seek distinct
financial solutions, information and advice on various investment avenues.
The Bank also has a wide array of retail loan products including Auto
Loans, Loans against marketable securities, Personal Loans and Loans for
Two-wheelers. It is also a leading provider of Depository Participant (DP)
services for retail customers, providing customers the facility to hold their
investments in electronic

form.

HDFC Bank was the first bank in India to launch an International Debit
Card in association with VISA (VISA Electron) and issues the Mastercard
Maestro debit card as well. The Bank launched its credit card business in
late 2001. By March 2010, the bank had a total card base (debit and credit
cards) of over 14 million. The Bank is also one of the leading players in the
“merchant acquiring” business with over 90,000 Point-of-sale (POS)
terminals for debit / credit cards acceptance at merchant establishments. The
Bank is well positioned as a leader in various net based B2C opportunities
including a wide range of internet banking services for Fixed Deposits,
Loans, Bill Payments, etc.

 Treasury

Within this business, the bank has three main product areas - Foreign
Exchange and Derivatives, Local Currency Money Market & Debt
Securities, and Equities. With the liberalisation of the financial markets in
India, corporates need more sophisticated risk management information,
advice and product structures. These and fine pricing on various treasury
products are provided through the bank's Treasury team. To comply with
statutory reserve requirements, the bank is required to hold 25% of its
deposits in government securities. The Treasury business is responsible for
managing the returns and market risk on this investment portfolio.
 Fundamental Analysis

 1. Introduction to Fundamental Analysis

The chapter lays a foundation to Fundamental Analysis, which is a holistic
approach to study and analyze a business. A fundamental perspective is important
because the stock prices of a fundamentally ..
 2. Mindset of an Investor
A insightful look at the basics of Fundamental Analysis and how it can be broken
down to Qualitative and Quantitative factors to study the intrinsic value of the
stock. Also includes a precise underst ..
 3. How to Read the Annual Report of a Company
The chapter lays a foundation for understanding the basic structure of a typical
annual report. It takes you through the various sections and helps you understand
what to look for when glancing throug ..
 4. Understanding the P&L Statement (Part 1)
The chapter discusses the overall content and format of the Profit and Loss
Statement. In this chapter we specifically look into the revenue side of the profit
and loss statement in detail by looking ..
 5. Understanding P&L Statement (Part 2)
The chapter explains the expense side of the Profit and Loss statement, its structure
and content by looking into the annual report of a listed company. The
accompanying notes/schedules are also analy ..
 6. Understanding Balance Sheet Statement (Part 1)
The chapter discusses information about the typical structure of the Balance Sheet.
In this chapter, we specifically looked into the liability side of the Balance Sheet ..
 7. Understanding the Balance Sheet Statement (Part 2)
Continuing from the previous chapter, this chapter explains the concept of assets
side of a typical Balance Sheet. ..
 8. The Cash Flow statement
 The chapter discusses an outline on the key components of the cash flow
statement, and their analysis. Also describes the connection between the Balance
sheet, Profit and Loss statement and Cash flow ..
 9. The Financial Ratio Analysis (Part 1)
In this three part series we discussed the analysis of financial statements through
financial ratios. In this chapter we looked at the profitability ratios which indicates
the profitability of the com ..
 10. The Financial Ratio Analysis (Part 2)
In the 2nd part of the series, we learn about the various Leverage ratios which help
us study the company’s debt with respect to the company’s ability to service the
debt. We also look into key op ..
 11. The Financial Ratio Analysis (Part 3)
In this concluding chapter, we look at the valuation ratios such as Price to sales,
Price to Book, Price to earnings and their attractiveness from an investment
perspective. ..
 12. The Investment Due Diligence
The chapter deals with understanding the basic steps required when it comes to
conducting an investment due diligence. The chapter discusses ‘Moats’ which is a
very crucial aspect when it comes to ..
 13. Equity Research (Part 1)
The chapter discusses how a Limited Resource Equity Research can be performed
by a layman. A basic but powerful checklist is introduced which helps in filtering
investment grade companies form a large ..
 14. DCF Primer
This chapter deals with the understanding of the concept of the Time value of
money and how the DCF model can be used to estimate the price of a stock. The
DCF analysis helps us to arrive at the prese ..
 15. Equity Research (Part 2)
Understand and interpret the concept of free cash flow. A study of the calculation
of the per share price using free cash flow and the total net present value of a stock.
..
 16. The Finale
An understanding of the drawbacks of the DCF Analysis and also a look at the
concept of Margin of Safety. Some insights into managing and rebalancing of your
stock portfolio

SWOT ANALYSIS

Strengths

 HDFC bank has 5326 branches and 14996 ATMs and is the second largest
private bank in India.
 HDFC bank operates in 2825 Indian cities and has more than 800 telephone
banking locations to service customers.
 The bank’s ATM is available in Plus/cirus, Visa Electron/ Maestro,
Visa/Master, and American Express domestic and international cards. That’s
also another reason why the most famous card for shopping and online
purchases is HDFC cards.
 In contrast to other private banks, HDFC Bank has a high degree of
customer loyalty.
 HDFC has a low turnover rate and is one of the best places to work in the
private banking industry.
 HDFC has many recognition and awards by various financial ranking
institutions such as Dun and Bradstreet, Financial Express, Euromoney
awards for innovation, Finance Asia country awards, etc., it has won ‘Best
Bank’ awards.
 HDFC has large number financial advisors guiding customers for good
investment options.
 Financial position: HDFC Bank has a solid financial position with
consecutive earnings over the last 5 years, along with accumulated income
reserves that can be used to fund potential capital spending.
 Has a broad asset base offering greater solvency.
 Return on Capital Expenditure: In the past, HDFC Bank was able to
effectively produce positive returns on the capital expenditure it spent on
different ventures.
 Trained Workforce: HDFC has a employee base of 104154 permanent full
time employees. HDFC Bank has invested heavily in its workforce training,
which has resulted in it hiring a significant number of professional and
motivated workers.
 Has a diverse workforce, with people of many ethnic, racial, cultural and
 educational backgrounds who help the organization bring in various ideas
and methodologies to do things.
 Revenue of HDFC Bank is 21 US billion Dollars.
 Has trained and certified competent teamworkers.
 Entering new markets: Creative teams from HDFC Bank have helped it to
come up with new products and reach new markets. In the past it was
successful, in most of the initiatives it took in new markets.
 Social Media: HDFC Bank has a strong social media presence with over
millions of followers on the three most prominent social networking
platforms : Facebook , Twitter and Instagram. It has a high degree of
customer engagement with low customer response time on those channels.
 Website: HDFC Bank has a well-functioning and engaging website that
attracts a huge amount of traffic and sales on the internet.
 Product Portfolio: HDFC Bank has a broad selection of products and
services.
 HDFC Bank’s geography and location give it a cost advantage in serving its
customers as compared with the competition. HDFC Bank products and
services including retail banking, wholesale banking, auto loans, treasury,
personal loans, two-wheeler loans, loans against property, lifestyle loan,
consumer durable loan, pand credit cards.Payzapp and SmartBUY are
HDFC Bank digital products.

Weaknesses

 HDFC bank has no good presence in rural markets, where its direct
competitor is expanding in the rural market as ICICI bank.
 In rural areas, HDFC does not enjoy first-mover privileges. With respect
to banking institutions, rural residents are hard-core loyalists.
 HDFC lacks methods for effective marketing, such as ICICI.
 The bank mainly works on high end consumers.
 Any of the commodity groups in the bank lack performance and have
very little market presence.
 HDFC’s share prices frequently fluctuate, causing investors to feel
confused.

Opportunities

 HDFC banks have stronger criteria of asset quality than government banks,
so it is possible that earnings growth will accelerate.
  Big enterprises and SMEs are rising at a very rapid rate. In terms of
managing corporate salary accounts, HDFC has a strong record.
 HDFC Bank has increased its portfolio of bad debts and, relative to
government banks, the recovery of bad debts is high.
 HDFC has really good overseas opportunities.
 Greater scope due to a good financial role for investments and strategic
partnerships.

Threats

 The non-performing assets (NPA) of HDFC rose from 0.18% to 0.20%.

While it is a small improvement, it is not a positive indication for the bank’s
financial health.
 Non-banking financial firms and banks of the modern era are rising in India.
 The HDFC is unlikely to increase its market share when a significant
challenge is levied by ICICI.
 In order to deal with private banks , government banks are seeking to
restructure.
 RBI has opened up to 74% to invest in the Indian market for overseas
banks.
Financials

Ratios 
Capital Adequacy Ratio - 18.8%
Net Interest Margin - 4.2%
Gross NPA - 1.32%
Net NPA - 0.40%
CASA Ratio - 46.1%

Segment revenue
Treasury – 12.37%
Retail banking – 50.30%
Wholesale banking – 28.47%
Other banking operations – 8.86%

Location wise breakup

Domestic - 99%
International - 1%

Sector wise loan breakup

Agriculture and allied activities – 31.87%
Advances to industries eligible as priority sector lending – 16.77%
Services – 38.91%
Personal loans – 12.45%
Particulars Mar-17 Mar-18 Mar-19 Mar-20

Sales 73,271.35 85,287.84 105,160.74 122,189.29

Expenses 23,855.69 29,531.08 34,856.27 45,459.21

Operating
Profit 49,415.66 55,756.76 70,304.47 76,730.08

Other Income 12,905.08 16,055.42 18,947.05 24,878.97

Depreciation 886.19 966.78 1,220.67 1,276.77

Interest 38,041.58 42,381.48 53,712.69 62,137.42

 Profit before tax 23,392.97 28,463.92 34,318.16 38,194.86

Tax 8,078.12 9,903.08 11,872.55 10,898.59

Net profit 15,280.48 18,510.02 22,332.43 27,253.95

EPS 29.81 35.66 41.00 49.70

Price to earning 24.19 26.44 28.28 17.34

Price 721.28 943.05 1,159.45 861.90

TREND WORS
S: 10 YEARS 7 YEARS 5 YEARS 3 YEARS RECENT BEST T
Sales
Growth 18.36% 17.11% 15.27% 14.66% 5.21% 14.66% 5.21%
58.12
OPM 64.71% 64.61% 63.81% 62.69% 58.12% 62.69% %
Price to 23 24 24 24 26 26
Earning .53 .17 .70 .39 .08 .08 23.53

SHAREHOLDING PATTERN MARCH 2021

Promoters 25.97
FIIs 39.79
DIIs 20.99
Government 0.24

Public 13.01

ROE %

2017 18%
2018 18%
2019 17%
2020 16%

Cash Flow Statement

Particulars 2019 2020

Cash from Operating Activity - -56,055 -16,690
Profit from operations 41,331 50,995
Loans Advances -167,645 -183,640
Operating investments -51,389 -99,922
Operating borrowings 0 0
Deposits 134,370 224,361
Other WC items -505 2,014
Working capital changes -85,169 -57,187
Direct taxes -12,216 -10,498
Cash from Investing Activity + -1,231 -891
Cash from Financing Activity - 15,718 22,852
Proceeds from shares 25,790 1,849
Redemption of debentures -2,875 0
Proceeds from borrowings 0 27,543
Repayment of borrowings -3,145 0
Dividends paid -4,053 -6,540
Other financing items 0 0
Net Cash Flow -41,567 5,271
 250000
200000
150000
100000
50000
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De he.. ng.. ire.. m.. m.. ee.. pt.. ed.. m.. ivi.. er .. et ..
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-150000
-200000
-250000

Profit and Loss A/c

Particulars Mar-18 Mar-19 Mar-20

Revenue 69,306 80,241 98,972
Interest 36,167 40,146 50,729
Expenses + 22,464 27,712 32,529
Financing Profit 10,676 12,383 15,714
Financing Margin % 15% 15% 16%
Other Income 12,296 15,220 17,626
Depreciation 833 906 1,140
Profit before tax 22,139 26,697 32,200
Tax % 34% 34% 35%
Net Profit 14,550 17,487 21,078
EPS in Rs 28.39 33.69 38.7
Dividend Payout % 19% 19% 19%
 120,000

100,000 Revenue
Interest
80,000 Expenses +
Financing Profit
Financing Margin %
60,000 Other Income
Depreciation
Profit before tax
40,000 Tax %
Net Profit
20,000 EPS in Rs
Dividend Payout %

0
Mar-18 Mar-19 Mar-20

Balance Sheet

Particulars Mar-18 Mar-19 Mar-20

Share Capital + 513 519 545
Reserves 91,281 109,080 153,128
Borrowings 741,550 944,817 1,080,235
Other Liabilities + 59,000 48,770 58,898
Total Liabilities 892,344 1,103,186 1,292,806
Fixed Assets + 4,000 4,008 4,369
CWIP 0 0 0
Investments 210,777 238,461 289,446
Other Assets + 677,567 860,717 998,991
Total Assets 892,344 1,103,186 1,292,806
1400000

1200000
Share Capital +
1000000 Reserves
Borrowings
800000 Other Liabilities +
Total Liabilities
600000 Fixed Assets +
CWIP
400000 Investments
Other Assets +
200000 Total Assets

0
Mar-18 Mar-19 Mar-20

Conclusion

Pros

• Good Rie average of 16.92%

• Good Revenue Growth Rate with average of 18.32
• Net npa 0.37%

Cons

• Lower the net profit margin, compare to last 3 years proft

margin.