HDFC Bank larger than all domestic peers

HDFC Group bigger than many of its global peers

Thanks to the mounting asset quality pressures and the carnage in bank stocks on one hand and HDFC Bank's excellent track record on the operating and asset quality fronts, HDFC Bank’s market capitalisation (market cap) at Rs 2,55,881 crore pips that of all its domestic peers. In fact, it is bigger than the combined market cap of Kotak Mahindra Bank and ICICI Bank (Rs 1,22,285 crore and Rs 1,20,467 crore respectively). HDFC Bank’s outperformance is more startling when compared against the public sector banks (PSB).

The market cap top seven PSBs totals to Rs 2,02,059 crore, which still lags HDFC Bank’s market cap by a whopping 21% thanks to the meltdown in these public sector banks' stocks since January. The resilience of HDFC Bank suggests that its strategy of having a relatively stronger retail portfolio has paid off well. Raamdeo Agrawal, co-founder and joint managing director of Motilal Oswal Financial Services agreeing with this view adds that HDFC Bank may have foreseen the likely pain in corporate loan books and hence decided to go slow on the same. “However, as every bank gets paid for what it does, the current levels suggest that there are bank stocks at cheaper valuation to HDFC Bank."

BANK OF BARODA	26,935.63
PUNJAB NATIONAL BANK	15,698.96
IDBI BANK	10,222.29
CANARA BANK	9,961.17
UNION BANK OF INDIA	8,472.71
BANK OF INDIA	7,339.70
HDFC Bank + HDFC Vs Global banks	Market cap (In $ billion)
HDFC BANK	37.68
HDFC LIMITED	25.96
Combined market cap	63.64
Combined market cap ^	56.77
MORGAN STANLEY	44.40
DEUTSCHE BANK	23.16
BARCLAYS	39.30
CREDIT SUISSE GROUP	27.30
UBS GROUP	57.69
HDFC held 26.47% stake in HDFC Bank as on December 30, 2015
^ Adjusted (cancelling) for HDFC's holding in HDFC Bank
All figures as on February 10, 2016
Source: Bloomberg, Stock exchanges

Interestingly, the market cap of HDFC Bank ($37.68 billion) surpasses that of global majors, Deutsche Bank ($23.16 billion) and Credit Suisse ($27.30 billion). The list expands when the combined market cap of its parent HDFC Limited and HDFC Bank is considered. At a combined capitalisation of $63.64 billion, the two institutions surpass the market caps of Morgan Stanley, Barclays, and UBS as well. Even after excluding the stake HDFC holds in HDFC Bank, it is ahead of these global majors except UBS, albeit by a very small margin.