Nilesh Shah of Envision Capital believes that HDFC Bank classifies as a growth stock and can be a good investment opportunity, despite the recent run-up that the stock has seen.
"It’s a growth stock and if I look at on PE multiples, it yesterday was at 18.8 times trailing earnings which is a discount to the Nifty, which I have never seen in my investing career that HDFC Bank trades at a discount to the Nifty valuations on a trailing earnings basis," Shah told CNBC-TV18 in an interaction on Wednesday.
"That to me is a standout indicator as to why HDFC Bank can end up being a good investment opportunity," he said.
HDFC Bank currently commands a 13.4% weightage in the Nifty 50 index, making it the highest weighted stock.
The Nifty 50 has gained nearly 2,000 points over the last month and HDFC Bank has contributed 16% of those gains. In points terms, the stock has contributed nearly 300 points to the index upside over the last month, almost double of the next best contributor - Reliance Industries (156 points).
Shares of HDFC Bank have risen 12% over the last month and are now trading close to their all-time high of ₹1,789. The stock's market capitalisation crossed the ₹13 lakh crore mark in today's trading session.
HDFC Bank has been an underperformer through most parts of the year. The stock snapped a four-month losing streak in November, gaining 5.5%. The market though, continued to move higher despite HDFC Bank's underperformance.
For the month of December, the stock is up nearly 10%, making it the best month the stock has had in this calendar year. In fact, December has turned out to be the best month for the stock since August 2021.
"I definitely feel the HDFC Bank stock would take your portfolio higher as well, given the fact that it's sitting right at the top of the most undervalued private sector bank when everything positive is being heard about anticipated for the banking sector as a whole. I don't see any reason why it won’t be higher than ₹2,000 in the next six to 12 months," Market Expert Prakash Diwan said on December 11.
Shares of HDFC Bank are trading 0.6% higher at ₹1,712.2. The move over the last one month has also ensured that the stock has turned positive for 2023, currently trading 5% higher for the year. This will be the 10th consecutive year of positive returns for the stock.
First Published: Dec 28, 2023 9:48 AM IST
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