Leading Independent Investment Research, Morningstar, Inc.

Morningstar

Leading Independent Investment Research

Morningstar, Inc.

Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. We offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors. 

Morningstar provides data on more than 500,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 16 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries, with more than $180 billion in assets under advisement or management as of June 30, 2015. We have operations in 27 countries.

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Equity Bottom-Up

Barring any glaring missteps, we think HDFC will continue to generate high returns on equity, or ROE, and is favourably positioned to leverage India's strong long-term economic growth prospects.Despite remarkable loan growth, averaging about 31% annually for the past 10 years, we like that HDFC has managed to expand its deposit base at nearly the same clip (of 29%), maintaining a low cost of funds and upholding its profitability.Indeed, with its deposit/loans ratio at about 1.2 times, the bank has been able to produce substantial net interest margins of 4.7% on average during the past decade, and 3.6% on a risk-adjusted basis, much higher than any of its peers.We also believe HDFC has good cost-control practices, with non-interest expenses consistently below 55% of revenue, which means more money flows to its bottom line.As the bank expands its reach via opening more branches in both urban and rural areas, scale advantages will begin kicking in, and overheads will stabilise at lower cost/income levels than 50% going forward.Analyst: Suruchi JainFull report below the fold...

Barring any glaring missteps, we think HDFC will continue to generate high returns on equity, or ROE, and is favourably positioned to leverage India's strong long-term economic growth prospects.Despite remarkable loan growth, averaging about 31% annually for the past 10 years, we like that HDFC has managed to expand its deposit base at nearly the same clip (of 29%), maintaining a low cost of funds and upholding its profitability.Indeed, with its deposit/loans ratio at about 1.2 times, the bank has been able to produce substantial net interest margins of 4.7% on average during the past decade, and 3.6% on a risk-adjusted basis, much higher than any of its peers.We also believe HDFC has good cost-control practices, with non-interest expenses consistently below 55% of revenue, which means more money flows to its bottom line.As the bank expands its reach via opening more branches in both urban and rural areas, scale advantages will begin kicking in, and overheads will stabilise at lower cost/income levels than 50% going forward.Analyst: Suruchi JainFull report below the fold...

HDFC Bank's narrow moat remains intact despite new bank entrants