1) HDFC Bank Limited (NYSE:HDB)
Number of Hedge Fund Holders: 40
HDFC Bank Limited (NYSE:HDB) provides banking and financial services to individuals and businesses in India, Bahrain, Hong Kong, and Dubai.
Wall Street analysts remain optimistic about the growth prospects of HDFC Bank Limited (NYSE:HDB), with the expected stabilization of net interest margin (NIM) in the upcoming quarters. HSBC expects that HDFC Bank Limited (NYSE:HDB) should see a modest increase of 10 bps in NIM over the period from the fiscal year 2025 to 2027. Furthermore, HSBC expects a gradual improvement in the core performance of the bank.
Recently, Bernstein SocGen Group highlighted that HDFC Bank Limited (NYSE:HDB) is reportedly engaging in the sale of portions of its auto and home loans portfolio. This will potentially amount to ~INR 700 billion, which translates to ~3% of its total loan book. This move by HDFC Bank Limited (NYSE:HDB) forms part of its broader strategy of rebalancing its balance sheet. It targets to reduce its Loan to Deposit Ratio (LDR) and lower its proportion of borrowings in its liabilities.
HDFC Bank Limited (NYSE:HDB) saw a faster-than-expected reduction in borrowings. Bernstein SocGen Group stated that, in Q1 2025, HDFC Bank Limited (NYSE:HDB) saw a run-down of ~INR 600 billion in borrowings, outpacing the expected figure of ~INR 250 billion. These measures should help the bank in adjusting its financial structure. These actions demonstrate a proactive approach to managing financial health.
Collectively, the measures are expected to help HDFC Bank Limited (NYSE:HDB) achieve a more stable and efficient balance sheet, stated Bernstein SocGen Group. As per Wall Street, the shares of HDFC Bank Limited (NYSE:HDB) have an average price target of $70.00.
Investment management company Ave Maria recently released its first quarter 2024 investor letter. Here is what the fund said:
“HDFC Bank Limited (NYSE:HDB) is a well-managed bank in India that has a track record of gobbling up market share and creating shareholder value. The bank has a long runway for growth, is overcapitalized, and is a highly skilled underwriter.”
While we acknowledge the potential of HDB as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than HDB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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