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buy shares | HDFC Bank: HDFC merged entity gains 4.5-5% market share: Gurmeet Chadha

“The merger will have a positive impact on the group’s other subsidiaries, including insurance, wealth management and securities, as well as some of the unlisted companies like HDB, which have also been under asset quality pressures due to Covid,” says Gurmet Chadhaco-founder, Complete Circle Advisors.



is HDFC bank a must-have in the portfolio or would you still stick with ICICI Bank and SBI?
It always has been, and all good companies experience periods of underperformance. There have been a variety of issues, from leadership changes to RBI imposing an embargo, technology issues, and that’s good news for the group and investors. It creates a very large entity. Now the balance sheet size would be more than 80 lakh crore. SBI is approximately Rs 26-27 lakh crore. There will be a 4.5-5% market share gain.

A lot of liquidity can be freed up from the balance sheet that can be used to spur growth, especially at times when interest rates may be tougher. We don’t know how it will turn out. There is a huge cross-selling opportunity. Management made this point of 70% HDFC Ltd Unbanked customers. 70% of the bank’s customers do not have a mortgage. Thus, both cross-selling and up-selling opportunities increase along with a much stronger bottom line.

They are employees of HDFC Bank. This news must have been a completely different emotion for you?
Absolutely. I regret selling my ESOPs much earlier in my career. But as I said, this is a long-term SIP stock for me personally, and it has proven to be very solid in terms of governance. Also we saw some signs of trend reversal and in the last few quarters there was very weak NII growth, credit growth was there but even the other banks were catching up. It used to always have a higher multiple for strong growth, strong NII growth, and that almost started to converge with ICICI and some other names.

Very rarely does one see HDFC below three multiples before this news broke, which we measure on a price to book basis. I also think this will have a good impact on the other subsidiaries in the group including insurance, wealth management and securities as well as some of the unlisted companies like HDB which have also been under asset quality pressures due to Covid. So all in all, it’s all going to pay off over a much longer period of time.

https://economictimes.indiatimes.com/markets/expert-view/merged-hdfc-entity-to-have-4-5-5-market-share-gain-gurmeet-chadha/articleshow/90644078.cms buy shares | HDFC Bank: HDFC merged entity gains 4.5-5% market share: Gurmeet Chadha

Adam Bradshaw

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