Banking major HDFC has a lot of catch up to do in terms of its stock price. The stock has corrected from Rs 1800 levels and is moving range bound since then.
Today HDFC stock moved lower than Rs 1500 levels, and experts think that the overhang of the HDFC Ltd- HDFC Bank merger is still looming over the stock.
Since HDFC Ltd was an NBFC, its loan portfolio and asset quality was calculated with different matrics than the bank. This has led to a decrease in the asset quality metrics of the merged entity, and a pressure on the net interest margins.
But things are looking to brighten up for the bank now. The merger has gone ahead successfully and is settling down. On the subsidiary side, HDB is doing quite well. In fact, Japan’s Mitsubishi UFJ Financial Group Inc (MUFG) is now in talks to invest $2 billion in lender HDB Financial Services Ltd.
HDB is doing exceptionally well. The company’s AUM has grown to Rs 83,989 crore as of Dec 2023. HDB has forayed into gold loan, consumer durable loans etc too.
The proposed investment by MUFG is a testament of the value created by HDB. MUFG is valuing the company at $10B. Right now, HDFC Bank holds 95% of the equity of HDB.
