In today’s briefing:
- HDFC Bank: Seasonality Impacts Q1 Growth, But All Is Well
- 2023 High Conviction Update | Polycab: Played Out As Anticipated, Now Time to Exit
HDFC Bank: Seasonality Impacts Q1 Growth, But All Is Well
- HDFC Bank (HDFCB IN) reported weak QoQ growth in deposits and advances. This is however temporary due to seasonality. The growth trajectory for rest of the year remains intact.
- HDFCB continues to invest aggressively into expanding its geographical presence to drive growth. Benign credit cost enables investments without impacting the ROA.
- HDFC Ltd (“HDFC”) has been also merged into HDFCB effective Jul 1. The merged entity is carrying sufficient liquidity at 120%+ LCR to meet the additional CRR and SLR needs.
2023 High Conviction Update | Polycab: Played Out As Anticipated, Now Time to Exit
- We published on Polycab as our 2023 high conviction idea on Dec 25 2022. Since then, the stock has been up 75%+, exceeding our 65%+ upside FY26 target.
- The steep rise was probably driven by strong earnings growth on the back of upbeat demand environment led by healthy domestic capex, rising exports and robust housing demand.
- At the current valuation, Polycab is richly valued and we assign a “SELL” rating. Polycab’s current market cap at INR 68700cr+ is well above our FY26 projection of INR 63500cr+.
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