Dalal Calls HDFC Bank a 'Screaming Buy' at 1.6x Book
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- Sameer Dalal of Natverlal & Sons Stockbrokers called HDFC Bank a 'screaming buy,' saying 'you do not get these opportunities quite often' as long as NPA numbers don't spike unexpectedly
- Dalal criticized the former chairman's resignation as an 'open-ended statement' that added to market panic, arguing the outgoing chair should have disclosed grievances to shareholders or asked them to vote rather than walking away
- HDFC Bank is trading at 1.6x price-to-book after adjusting for subsidiary investments, compared to its historical 3.5-4x range, which Dalal described as a 'mighty discount' for a bank that 'can still grow at 20%'
- HDFC Bank's growth has slowed to 10-12% currently, but Dalal expects acceleration once corporate lending rebounds, citing the bank's low-cost funding and reach as competitive advantages for a re-rating
- Dalal attributed the elevated loan-to-deposit ratio to the post-merger bond repayment from HDFC Limited rather than a structural problem, saying the bank can raise deposits 'at slightly higher rate' without hurting total borrowing cost
- Dalal framed the investment case around a macro question—whether India's premium valuation multiples are sustainable 'given the fact that we keep hoping that growth comes'—but concluded that structural tailwinds will eventually justify current prices
Why it matters: Dalal's 1.6x adjusted P/B call anchors a contrarian buy thesis on India's largest private bank at a moment when governance headlines and slowing growth (10-12%) have shaken investor confidence, with the historical 3.5-4x multiple framing the upside if corporate lending revives.
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