We recently published a list of 12 High Growth Non-Tech Stocks That Are Profitable in 2025. In this article, we are going to take a look at where HDFC Bank Limited (NYSE:HDB) stands against other high-growth non-tech stocks that are profitable in 2025.
What to Expect From the Market in Q2 2025?
On March 27, David Sekera, CFA, chief US market strategist at MorningStar released his Q2 2025 market outlook. He highlights that the market was priced to perfection at the start of the year, trading at a rare premium to its fair value. He advised investors at the start of the year to overweight value stocks, which were attractively priced while underweighting growth stocks that were significantly overvalued. This advice proved prescient as the Morningstar US Market Index fell by 1.74% through March 24, with losses concentrated in growth and core stocks. This was particularly true for stocks linked to artificial intelligence, which dropped by 3.79% and 3.52%, respectively. In contrast, value stocks gained 4.59%, showcasing their resilience.
Sekera noted that as of March 24, the US equity market had declined to a price/fair value ratio of 0.95, representing a 5% discount to Morningstar’s fair value estimates. Moreover, growth stocks experienced a sharp correction, reducing their premium from 24% at the start of the year to just 3%. On the other hand, despite their recent gains, value stocks became even more undervalued, trading at a 13% discount to fair value. He emphasizes that this has made value stocks the most attractive investment category for the year. His outlook also addresses market dynamics by capitalization. He recommends overweighting small-cap stocks due to their significant undervaluation at an 18% discount to fair value. However, he cautions that small-cap performance might not materialize until later in the year when economic conditions improve and monetary policy becomes more accommodative. Conversely, large-cap and mid-cap stocks are less appealing as they are trading at similar discounts to the overall market.
Moreover, monetary policy plays a central role in Sekera’s analysis. Morningstar’s economics team forecasts three federal funds rate cuts in 2025 and anticipates a gradual economic rebound starting in early 2026. While long-term interest rates are expected to remain stable initially, they are projected to enter a multiyear downward trend later in 2025. He also addressed misconceptions about market sell-offs being driven by tariffs. Instead, he attributed much of the downturn to a concentrated sell-off in AI-related stocks. According to Morningstar’s analysis, losses from just ten highly AI-correlated stocks outweighed overall market declines, with seven of these being among the top-performing stocks in 2024.
Our Methodology
To curate the list of 12 high-growth non-tech stocks that are profitable in 2025, we used the Finviz stock screener, Seeking Alpha, and Yahoo Finance as our sources. Using the screener we aggregated a list of non-tech stocks that have grown their revenue and net income by more than 15% over the past 5 years. Next, we cross-checked the 5-year sales growth and net income from Seeking Alpha. We also checked for TTM net income from Yahoo Finance and only added companies that had a TTM net income of more than $500 million. Lastly, we ranked the stocks in ascending order of the number of hedge fund holders, sourced from Insider Monkey’s Q4 2024 database. Please note that the data was recorded on March 28, 2025. Also note that for some companies the TTM net income was mentioned in foreign currencies, in such cases it was manually converted to USD. The conversion rates are as of March 28, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A business owner tallying their profits in the back office of a local banking branch.
HDFC Bank Limited (NYSE:HDB)
5-Year Sales Growth: 31.09%
5-Year Net Income Growth: 21.50%
TTM Net Income: $8.12 Billion (INR 695.8 Billion)
Number of Hedge Fund Holders: 50
HDFC Bank Limited (NYSE:HDB) is one of India’s leading private sector banks, offering a comprehensive suite of banking and financial services. Its operations are divided into key segments such as Retail Banking, Wholesale Banking, Treasury Operations, and other Financial Services.
During the fiscal third quarter of 2024, HDFC Bank Limited (NYSE:HDB) reported ₹652.8 billion in consolidated net revenue and ₹176.6 billion in profit after tax. The profit after tax grew by 13.1% year-over-year, whereas the net income rose 7.7% to ₹306.5 billion. Management noted that the bank is navigating a challenging macroeconomic environment in India, marked by tight liquidity, moderating urban demand, and volatility in the Indian rupee. Despite the challenges, HDFC Bank Limited (NYSE:HDB) achieved robust growth in average deposits, with a 16% increase year-over-year. Moreover, it also added over 1,000 branches, enhancing its reach and accessibility for customers. The bank is well-positioned with sufficient liquidity and capital, enabling it to capitalize on opportunities when macroeconomic conditions improve. It is one of the high-growth non-tech stocks that are profitable.
Brown Advisors Global Leaders Strategy stated the following regarding HDFC Bank Limited (NYSE:HDB) in its Q4 2024 investor letter:
“HDFC Bank Limited (NYSE:HDB) has shown robust fundamental business drivers, but the shares have relatively underperformed since its merger with former parent HDFC Ltd. This merger enhances HDFC Bank’s long-run business opportunities, particularly mortgages, in the Indian market but comes with short-term sub-optimal funding which we expect to unwind over the next couple of years. With an enhanced competitive position, we feel it unlikely this remains an issue over time. HDFC Bank has also shown good downside protection historically when the credit cycle turns, and the bank’s defensive lending practices allow it to outperform peers. Impressively, management has expanded lending at the right time historically too. We believe these characteristics remain intact.”
Overall, HDB ranks 7th on our list of best aerospace and defense stocks to buy according to analysts. While we acknowledge the potential of HDB as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an 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.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires
Disclosure: None. This article is originally published at Insider Monkey.
