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HDFC Bank (HDB) Hits New Lifetime High

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified HDFC Bank ( HDB) as a new lifetime high candidate. In addition to specific proprietary factors, Trade-Ideas identified HDFC Bank as such a stock due to the following factors:

  • HDB has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $40.1 million.
  • HDB has traded 22,951 shares today.
  • HDB is trading at a new lifetime high.

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More details on HDB:

HDFC Bank Limited, together with its subsidiaries, provides a range of banking and financial services to individuals and businesses in India, as well as in Bahrain and Hong Kong. The company operates in four segments: Retail Banking, Wholesale Banking, Treasury, and Other Banking Operations. The stock currently has a dividend yield of 0.7%. HDB has a PE ratio of 32.9. Currently there are 2 analysts that rate HDFC Bank a buy, no analysts rate it a sell, and none rate it a hold.

The average volume for HDFC Bank has been 1.1 million shares per day over the past 30 days. HDFC has a market cap of $37.0 billion and is part of the financial sector and banking industry. Shares are up 36% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates HDFC Bank as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity and compelling growth in net income. However, as a counter to these strengths, we find that the growth in the company's earnings per share has not been good.

Highlights from the ratings report include:

  • The revenue growth came in higher than the industry average of 2.7%. Since the same quarter one year prior, revenues rose by 17.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Commercial Banks industry and the overall market, HDFC BANK LTD's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • Powered by its strong earnings growth of 31.81% and other important driving factors, this stock has surged by 32.65% over the past year, outperforming the rise in the S&P 500 Index during the same period. Setting our sights on the months ahead, however, we feel that the stock's sharp appreciation over the last year has driven it to a price level which is now relatively expensive compared to the rest of its industry. The implication is that its reduced upside potential is not good enough to warrant further investment at this time.
  • HDFC BANK LTD has improved earnings per share by 31.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. However, we anticipate underperformance relative to this pattern in the coming year. During the past fiscal year, HDFC BANK LTD increased its bottom line by earning $1.83 versus $1.56 in the prior year. For the next year, the market is expecting a contraction of 19.7% in earnings ($1.47 versus $1.83).
  • The gross profit margin for HDFC BANK LTD is rather high; currently it is at 54.50%. Regardless of HDB's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, HDB's net profit margin of 17.86% is significantly lower than the industry average.

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