FINLATICS|FMEP

H D FC BA N K LTD.
RESEARCH INSIGHT
BANKING/ FINANCE SECTOR

TAB LE O F CO N TEN TS

1. AB OUT T HE COMPANY

- GENERAL OVERVIEW

- HISTORY

2. SHAR EHOLD I NG PAT T ER N OF T HE COMPANY

3. MANAGEME NT OF T HE COMPANY

4. SWOT ANALYSIS

5. COMPETITIVE ANALYSIS

6. CONCLUSIONS
 A B O U T T H E C O M PA N Y
HDFC BANK LTD.

GENERAL OVERVIEW

HDFC Bank is one of India's top-tier banks providing an extensive range of financial products
and services to over 43 million customers. The company was founded by Aditya Tapishwar
Puri in August 1994 and is headquartered in Mumbai, India. The Bank has two subsidiary
companies, namely HDFC Securities Ltd and HDB Financial Services Ltd.

HDFC Bank Ltd. has three primary business segments, namely banking, wholesale banking
and treasury. The treasury segment primarily consists of net interest earnings from the Bank's
investment portfolio, money market borrowing and lending, gains, or losses on investment
operations and on account of trading in foreign exchange and derivative contracts. The retail
banking segment serves retail customers through a branch network and other delivery
channels, as well as through alternative delivery channels.

The bank provides its corporate and institutional clients a range of commercial and
transactional banking products. The other banking business segment include income from
para banking activities.

In 2020, HDFC Bank was ranked No 3 in India by customers in Forbes World’s Best Banks
survey. The survey was conducted across 23 countries and 40,000 customers.

HISTORY

HDFC Bank was incorporated in 1994, as a subsidiary of the Housing Development Finance
Corporation, with its registered office in Mumbai, India. The bank is the first of its kind to
receive an in-principle approval from the RBI for establishment of a bank in the private sector.
Certificate of Commencement of Business was received on October 10th, 1994 from RBI.

HDFC Bank launched its international debit card in November 1999, enabling account
holders to their access bank account from anywhere in the world. This was the first
international debit card in India that was launched in association with Visa International.

In 2003, HDFC Bank launches India's first mobile payment solution.

As of March 31, 2020, it had 5,416 branches and 13,640 automated teller machines in 2,803
cities/towns.

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 S H A R E H O L D I N G PA T T E R N O F
T H E C O M PA N Y
HDFC BANK LTD.

SHAREHOLDING SUMMARY

Promoter MF FII Public Others

HDFC Bank’s shareholding pattern indicates a decrease in promoter holdings from 26.1% to
25.97% in the year 2020-21. Over the period of March 2019-2021, HDFC Bank’s promoter
holdings have reduced. While at first glance a low promoter holding is generally considered
negative, HDFC’s stock has a high FII holding (39.79%) which is an indicator of confidence
in the company.

FII Holding %
40.5
40
39.5
39
38.5
38
37.5
37
36.5
36
35.5
35
Mar-19 Jun-19 Sep-19 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Mar-21
Holding %

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M A N AG E M E N T O F T H E C O M PA N Y
HDFC BANK LTD.

MANAGING DIRECTOR AND CEO

Mr. Sashidhar Jagdishan

Mr. Sashidhar Jagdishan, also known as Sashi, has been

Managing Director, Chief Executive Officer and Additional
Director at HDFC Bank Ltd. since October 27, 2020. Mr.
Jagdishan served as Head – Finance, Human Resources, Legal
& Secretarial, Corporate Communications, Admin, Infra, CSR
at HDFC Bank Ltd until October 27, 2020. Mr. Jagdishan
holds a Bachelor of Science degree in Physics from the University of Mumbai and MA in
Economics of Money, Banking and Finance from the University of Sheffield, UK

LEADERSHIP TEAM

NAME POSITION

Srinivasan Vaidyanathan Chief Financial Officer

Santosh Haldankar Chief Compliance Officer

Kaizad Bharucha Executive Director

Bhavesh Zaveri Group Head of Operations

Rakesh Singh Group Head of Investment Banking

Ramesh Lakshminarayanan Chief Information Officer & Group Head of IT

Manisha Parkar Investor Relation Contact

Parag Rao Country Head of Payments

Vinay Razdan Chief HR Officer & Group Head of HR

Abhay Aima Group Head of Equities

Jimmy Tata Chief Credit Officer

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 BOARD OF DIRECTORS

HDFC Bank’s board members are as follows:

NAME POSITION

Sashidhar Jagdishan MD, CEO & Additional Director

Kaizad Bharucha Executive Director

Renu Karnad Additional Non-Executive Director

Atanu Chakraborty Independent Part-Time Chairperson

Sanjiv Sachar Independent Non-Executive Director

Umesh Sarangi Independent Non-Executive Director

Mavinakere Ranganath Independent Non-Executive Director

Sandeep Parekh Independent Non-Executive Director

Malay Patel Independent Non-Executive Director

Srikanth Nadhamuni Non-Executive Director

Sunita Maheshwari Additional Independent Director

As of 31st March 2020, HDFC Bank has 116,971 permanent employees, out of which 21,439
are women employees. Within this time, the bank has not hired employees on a contractual/
temporary basis. Employee count over a period of 10 years at HDFC Bank Ltd. is as follows:

10 Year Employee Count

140,000
120,000
100,000
80,000
60,000
40,000
20,000
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

No. of Employees

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 S WO T A NA LYS I S
HDFC BANK LTD.

STRENGTHS

• Customer Loyalty: In contrast to other private banks, HDFC Bank Ltd has a higher
degree of customer loyalty.

• Excellent Performance in New Markets: HDFC Bank Limited has built expertise at
entering new markets and being successful, which has led to a new and consistent
revenue streams.

• Highly Skilled Workforce: HDFC Bank Limited is investing huge resources in training
and development of its employees resulting in a workforce that is not only highly
skilled but also motivated to achieve more.

• Strong Supplier and Distribution Network: Over the years HDFC Bank Limited has
built a reliable distribution network that can reach majority of its potential market. It
also has a strong base of reliable supplier of raw material thus enabling the company
to overcome any supply chain bottlenecks.

• Strong Financials: HDFC Bank has maintained a solid financial position with
consecutive earnings growing by 18.8% per year, over the last 5 years. The company
was also able to effectively produce positive returns on the capital expenditure with a
ROCE of 7.18 %. HDFC Bank's current net profit margins (40.8%) are higher than
last year (37.6%). The company also has strong free cash flows that provide resources
in the hand of the company to expand into new projects.

WEAKNESSES

• Limited Success outside Core Business: Even though HDFC Bank Limited is one of
the leading organizations in its industry it has faced challenges in moving to other
product segments with its present culture.

• Restricted IT Investment: HDFC Bank’s investments in core technology have been

considerably low, around 2-5% of their revenue. In the time of COVID-19 which led
to a surge in digital transactions, HDFC Bank faced operational issues due to
technology outages.

• Demand Forecasting: HDFC Bank Limited is not very good at product demand
forecasting leading to higher rate of missed opportunities compare to its competitors.

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 OPPORTUNITIES

• Increased Presence in the Rural Market: Rural penetration is low for HDFC as
compared to nationalized banks. Because of a weak presence in the rural market,
HDFC has not been able to enjoy first-mover privileges, when it comes to new
launches. This is an opportunity for them to expand and maintain a stronger foothold
in the rural market as well.

• Better Understanding of Trends: New trends in the consumer behavior can open up
new market for the HDFC Bank Limited. It provides a great opportunity for the
organization to build new revenue streams and diversify into new product categories
too.

• New environmental policies: The new opportunities will create a level playing field for
all the players in the industry. It represents a great opportunity for HDFC Bank
Limited to drive home its advantage in new technology and gain market share in the
new product category.

• New customers from online channel: Over the past few years the company has
invested vast sum of money into the online platform. This investment has opened new
sales channel for HDFC Bank Limited. In the next few years, the company can
leverage this opportunity by knowing its customer better and serving their needs using
big data analytics.

THREATS

• Intense Competition: Stable profitability has increased the number of players in the
industry over last two years which has put downward pressure on not only profitability
but also on overall sales. New products developed by the competitor or market
disruptor could be a serious threat to the company in medium to long term future.

• Lack of Innovative Products: Over the years, HDFC Bank has developed numerous
products but those are often response to the development by other players. Secondly
the supply of new products is not regular thus leading to high and low swings in the
sales number over period of time.

• External Strategic Factors: Rising raw material can pose a threat to the HDFC Bank
Limited profitability. Imitation of the counterfeit and low-quality product is also a
threat to HDFC Bank Limited’s product especially in the emerging markets and low-
income markets.

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 CO M PET I T I V E A NA LYS I S
HDFC BANK LTD.

Listed below are the top 4 competitors of HDFC Bank Limited:

NAME P/E MAR DIV. NP QTR SALES BOOK

CAP.(CRS) YLD. (₹.CRS) QTR VALUE
(%) (₹.CRS) (₹)
HDFC Bank 26.25 783,724 0.17 8,758 30,080 354
Ltd
ICICI Bank 30.11 391,794 0 4,940 19,730 202
Ltd
Kotak 54.44 356,562 0 1,854 6,791 300
Mahindra Bank
Ltd
State Bank of 21.86 315,083 0 5,196 66,735 255
India
Axis Bank Ltd 81.12 204,799 0 1,117 15,498 323

P/E Ratio
90
80
70
60
50
40
30
20
10
0
HDFC Bank ICICI Bank Kotak Mahindra SBI Axis Bank

P/E Ratio

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 CONCLUSIONS
HDFC BANK LTD.

HDFC Bank Limited has shown a steady performance as business trends

swiftly undergo normalization after the coronavirus outbreak. The bank’s
operating performance remains steady, aided by healthy revenue growth. Their
profit margin has improved and the share price has been stable over the past
few months. HDFC Bank Limited maintains its dominant position in the
current challenging business market, therefore sustaining their title as a premier
bank in India. HDFC Bank Limited has numerous strengths that help it to
thrive in the market place. However, they also have some weaknesses to
improve upon.

A recommendation for HDFC Bank would be to identify prospective

customers in geographical locations where newer opportunities for the bank
can be explored and customer awareness can be practiced. HDFC Bank would
definitely benefit from some strong marketing campaigns because its
positioning and unique selling proposition is not clearly defined which can lead
customers to reach out to its competitors.

In conclusion, the competition from the existing players and new fintech
players in the banking/finance sector is tough, however if HDFC continues to
maintain a healthy financial performance and consciously gives attention to
digitization and better technological frameworks, it is sure to be a top
contender in the Indian banking sector for a long time.