Articles, Blog

हिंदी – My favourite stock

हिंदी – My favourite stock


Hello investors , my name is Sagar and in this video , i´m going to talk about my favourite stock many people wanted to know that if I had the change to invest in only one company , which one would it be in this video , I´ll tell you exactly the name of the company and why I like it The name of the company is HDFC Bank . You might have seen videos on this bank in my channel I would recommend you watch those if you want to know more about the business model and financials I will leave the link above. In this video , I will only explain that out of all stocks , why this is my favourite Let´s start with a very simple product , which is personal loan. Let´s imagine that there are 4 banks offering personal loan Which bank would you choose ? Your decision will be based upon 2 factors The first point is customer service. Many people like to see how the bank is going to trust you but many people would sacrifice that for the second point , which is interest rate Let´s imagine that out of 4 banks , 3 banks offer you the loan with a 15 % interest rate but the fourth bank offers you the loan with a 10 % interest rate. Which bank are you going to choose ? Of course , you will choose the fourth one because you have to pay a lower interest rate and this is one of the main advantages of HDFC Bank . Many of their loans , especially personal loans , have a very low interest rate and as many people trust HDFC Bank , they are able to get customers automatically in 2019 , the company posted revenue of 1.2 lakh crores but they only spent 159 crores in advertisement this is only 0.1 % of their total revenue Now that you know how they get their customers , let´s understand how they make money We know that the bank can give a personal loan with a 10 % interest rate but the ban doesn´t have any money . First , they will have to borrow money They won´t be able to borrow for free and they have to pay interest on that Let´s imagine that the bank has to pay 5 % interest when they borrow and they give a loan for 10 % , the 5 % difference is known as NIM ( Net interest margin ) We will talk about this later as well but in this case , we know there it a 5 % NIM But , if somehow , they can give a loan for 10 % and borrow at 4 % instead of 5 % , their NIM becomes 6 % They give a 10 % loan because other companies are giving 15 % interest loan . They still have an edge with that interest rate but if I can decrease the borrowing interest rate , the NIM automatically improves this is very important in banks and that´s why we look at the CASA ratio it helps us understand the current and savings accounts ratio out of total deposits and this is important because we pay a very low interest rate on current and savings account So we know that is their CASA ratio is very high , the bank is able to borrow money at a very low interest rate HDFC Bank has a CASA ratio of 42 % . Anything higher than 40 % is a very great number Kotak Bank has one of the best CASA ratio Unfortunately , many people misunderstand the CASA ratio and let me explain why I´m sure you have seen that the CASA ratio of IDFC First is increasing rapidly but there is a reason behind it When we are talking about savings account , every bank offers you a different discount rate HDFC bank offers you a 4 – 5 % interest rate on Savings account but IDFC First offers you 7 % on it As a customer , of course I would open my account in IDFC First because it offers a higher interest rate and that´s why their CASA ratio is increasing rapidly but earlier , I mentioned that we offer the loan at 10 % interest rate and we borrow at 5 % , giving us a 5 % NIM but if I offer a higher interest rate while I´m borrowing , it affects my NIM Interesting , HDFC Bank actually doesn´t offer you such a high interest on their savings account compared to other banks but many people still want to open their account in HDFC Bank because they trust them and that´s why they chose this bank , even though they get a lower interest rate . This is another big advantage they have Now we know how they get their customers and why CASA ratio is so important . It helps us understand their NIM. HDFC bank´s NIM is 4.2 % . Anything higher than 3 – 4 % , is a very good number Many people like to see the NIM for the last three year , which is a very good thing. In the case of HDFC Bank , something interesting can be seen. If you check their NIM after 2006 , every year , their NIM was higher than 4 % This basically tells you that they are able to maintain their margins as they control their borrowing and lending interest rate very carefully Their NIM has been increasing as in 2006 , it was 4 % and in 2019 , it was 4.2 % , which is very good Now , let´s try to understand the customers of HDFC Bank . Here we have two categories : corporate and retail. Corporate includes big and small companies. The second category is retail . This could be a simple home or auto loan for you and me Usually , banks like to focus on one category. For example , IDFC First , wants to focus on retail loans Yes bank , focuses on corporate lending but HDFC bank actually does both pretty well 54 % of their loans are retail and 46 % is wholesale. Basically , they have a very diversified business model In retail loans , we have many categories such as personal , home or auto loan HDFC Bank is very conservative and they don´t want to have a lot of exposure to one single category 20 % of their retail loans fall into the category of personal loans . This is the biggest category . auto loans is 18 % but you can see that their exposure is not so high in any category Let me explain why is this so important. Everyone is talking about auto slowdown and how nobody is actually buying a car so their auto loans might get affected but it doesn´t matter because their exposure is not so high and the second category is wholesale ,where they give loans to companies They follow the same strategy and the exposure is not so high in any category Some loans are for big companies while others , are for small companies I will share one interesting point . When the bank started in 1994 , they only used to work with big companies as the risk was very low. as they had good cash flows , they were able to repay the money easily but their margins wern´t good because you charge them a lower interest rate but HDFC Bank still had good margins and this was because they had a good CASA ratio , where they were paying low interest rate so they were charging low interest rate on the loans but they were able to borrow at a low interest rate So how can we measure risk and if the bank is going a good job or not ? We always check their NPA or non – performing assets Many times , banks are not able to collect the money back because the client had a bad situation as the bank doesn´t make any money on it, it´s known as non – performing asset. Asset stands for loans. The NPA I just explained is gross NPA. Let´s imagine that a bank has 100 crores of gross NPA according to regulations , banks have to keep some money aside, which is known as provisions We have 100 crores of gross NPA and the bank creates 50 crores of provision , that gives us 50 crores of net NPA This is seen as a % of total loans. We want this to be lower than 1 % , if it´s lower than 0.5 % , this means the bank is taking very little risk and they are giving loans to very good clients because if the clients aren´t able to pay back ,we would see the NPA increase drastically I always like to check the NPA between 2006 – 2009 . This is because at that time , we had the financial crisis many banks had given loans but they weren´t able to collect back the money because many people lost their job and they weren´t able to repay back the money and this caused the NPA´s to surge For example , if you take a look at ICICI Bank , their Net NPA went from 0.7 % in 2006 to 1.9 % in 2009 this is because they had given loans to such people that wern´t able to repay the loan That´s why it´s so important to check the Net NPA at that time . In the case of HDFC Bank , between 2006 and 2009 . every year the Net NPA was 0.4 % except 2009 , it was 0.6 % but this was because they acquired Centurion Bank but it came down again the next year so they are choosing their clients carefully and they are able to collect the money back easily but the interest income , which they earn from loans , is only 71 % . The rest they earn from fees and commissions they earn money through their credit cards , foreign exchange , cash management basically , they have created two growth engines for themselves. Many times , the interest income might grow at a slower pace but the fees and commission category compensates for it the fees and commissions category has been increasing between 15 – 20 % every year . The company also has 2 subsidiaries The first one is HDFC securities , which is their broking business you can see it´s growing nicely in 2019 , it reaches 329 crores of profit that´s a profit margin of more than 40 % and the second subsidiary is HDB Financial services , this is an NBFC So why did they actually start an NBFC ? This NBFC is located in underserved comunities with very little competition as you can see , profit has been increasing consistently in 2019 , it reached 1153 crores of profit as you can see , both of their subsidiaries are doing very well but they contribute very little to the overall profit Now , let´s talk about their valuation. I already talked about their financials in the last video I want to share a very interesting chart here In 2009 , their profit margins were 11.4 % but in 2019 , this reached 18 % So how were they able to increase their profit margins ? as I explained earlier, they control how much interest they pay on the borrowed money The biggest expense of a bank is interest they have to pay in this case , they control the interest paid very closely Secondly , they also control their general expenses. If they don´t need a new brand in a zone , they won´t open it because they know they will have to pay rent on it , so it´s an additional expense and that´s how they are able to increase their profit margin consistently . They keep investing heavily in technology . Not everything is perfect. As you know , the management is going to change but I think the HDFC bank structure and culture is very strong unless they do something so bad that people don´t trust them and then it will affect them As I mentioned earlier , they don´t give the highest interest rate for savings account but people still prefer them the company will still do well if people trust them plus the diversified portfolio is a very good strategy and it will help them in the future so the risk is very low and they keep growing consistently but the profit growth has been declining . Before , they used to grow at more than 30 % , then it became 25 – 30 % and now it´s around 20 % In this case , the company is focusing on rural and semi urban areas. Currently , more than 50 % of their branches are in these areas I want to mention that I still haven´t invested in this company but as I see stock prices falling , I would like to invest soon I told my family members that if you want to invest for 5 – 10 years , you can invest at today´s price and your returns would be amazing So if you would like to know how I get all this information or how I actually analyse companies or you would like to know how I value stocks including banks and NBFC´s I have my own course , which is video format , where I teach everything if you would like to know more about it , I will leave the link in the description don´t forget to subscribe to see more videos

Tagged , , , , , , , , , , , , , , , , ,

100 thoughts on “हिंदी – My favourite stock

  1. Hi sagar. You are doing great job. Can you make a video on ICICI bank at this stage. Because ICICI bank also look atractive and can you give its prospective?

  2. Are bhai tumhare purane videos hi dekhlo…
    Kon kon se stocks recommend kiye the…
    Aur aaj wo stock ka kya haal hai..

  3. Sir mai dubai ma job karta hu.par mere pass demat accout nahe hai.kya mai mere brother ke demat acount use karke trading kar sakta hu dubai ma.?

  4. Great job Sagar looks like the market will slide in Coming weeks but hdfc bank is the top share to invest In for next 5 years

  5. We known your hard work behind every video you post. A small request you that if any chance to reduce the subscription fee

  6. Sir, Ive started investing in
    1 Bajaj Finserv
    2 HDFC Asset Management Co
    3 HDFC Life
    4 Avenue Supermarts
    5 VST Industries
    Are these good companies or should i make some changes inn the same?

  7. Please give your analysis on South Indian Bank, it looks like a good governance bank. Current market cap is less than Yearly operating profits.

  8. Sir pls make veidio on how to gain your share market knowledge.. And what you do after class 12..it will be great help. I am in class 12 and I want to make carrier in finance. Pls help

  9. Sir ab to market se dar lag rha h

    Aaj me apse polycab India pe video bnnane k Lia nhi bolungaa kapde fat gye sir
    Me hamesha k Lia marcket chor rha huu
    Nic Video aur aaap Corona se bachia sir kyo ki aap Europe pllz apna khayal rhkhna ham aap ko khona nhi chte h sir
    Nic Video 😞😞😞😢

  10. All the stocks are so much corrected that if you pick any stock from sensex it can give you returns of more than 40% if situation become good in next few weeks
    Hdfc bank Reliance HDFC TCS Bandhan bank on my list

  11. Asset growth rate for 5 year is 16.70% and net profit growth rate is 15.58℅ ,which is less than net asset growth isn't it bad ….

  12. Hey Dr. Sagar! Great content!
    I'm still holding on to IDFC first bank and Manappuram finance stock. What is your opinion?

  13. Sir will you also analyse american companies like Berkshire Hathaway because they have 2 types of stocks, class A and class B.
    How does that work.
    Also i want to see how the foreign companies do business.

  14. Sagar bhai just once take a look at exide's balance sheet they have greater money invested then their current m cap

  15. Hello Sagar bhai hope you are well …… can u please tell one need to be very good in MATHS , ACCOUNTS and STATISTICS to make a above average career in STOCK MARKET ???? because i am below average in these subjects…….& can u please make a dedicated detailed vedio on SKILLS REQUIRED for making career in STOCK MARKET …….. Hope you will reply Sagar bhai and make a dedicated vedio ….

  16. Kotak Mahindra Bank and HDFC bank both are good but maximum returns you will get in Kotak Mahindra Bank , It’s my Observation 🤓

  17. Would just like to share my personal experience on the point of interest rate for HDFC being low. I bought my car through loan, and this situation the car dealer recommends HDFC bank as they earn good commission from them. The HDFC guy immediately came to the showroom with papers, after some basic questions and without any much verification asked me to sign at certain places and was giving me loan at 8.25% interest rate. I found this fishy and for some reason i asked the car dealer that i would like to take loan from SBI. The car dealer said that the SBI process would take lot of time as there process is strict and there interest rate was also @9.25%. I found the SBI process much genuine as they collected n number of documents and also charged me 9.40% interest rate because my credit score was low. I actually went with SBI even though interest rate was high, because of obvious reasons but many other people just look at the low interest rate.

    So this might be again yes bank like situation, in yes bank case they have given loan to low rating companies and HDFC is giving loan to low rating personals, at some point if these people started defaulting like the hosing crisis in US then this bank might be in lot trouble.

    Even though i like HDFC management, i am making sure i would stay away from Banks and NBFCs as investment option. This is just a personal opinion shared because of personal experience. Would like your take on this as well

  18. Now coronavirus made investment so simple. All the good quality and fundamentally strong companies have been corrected so much . It’s golden opportunity to buy the stocks. How much coronavirus does it going to affect to stock market it’s falling knife. Now it’s so simple to invest and make huge returns for long term.

  19. Educative but not relevant to invest in a bank. Why the hell everybody talk in retrospect? Just move ahead, talk about the business model as financial information is available and analysed to the detail by the management. Growth has decreased because the company has moved from a growth stock to a value stock. No credit to the management specially Aditya puri makes me think that analyst like you made investors to fall in trap of yes bank. Also do tell why its ADR is falling in US. No mention that company tied quite early with the top corporates to have their employees bank account with them which still continues and they have them as their loan takers. Customer base is their advantage. I believe Aditya puri and Deepak parekh, two chartered accountants, does need a mention.

  20. Aaj aap kyu paisa dalne ke liye bol rahe hai..
    Jabki aaj highest low pe trade kar raha hai .
    Aapki sabse achi baat ye hai ki , kabhi aap recomend nahi karte.
    Kintu aaj aap kiye hai .ye mujhe thik nahi laga..

  21. First of all thankewww for replying Sagar bhai ….means if a person who is not good in MATHS ,ACCOUNTS & STATISTICS can also perform good in stock market ? Your reply will help me to choose my CAREER

  22. Thanks very much for making this video I was waiting for it from long time.
    What you think about ICICI bank and Axis bank ??

  23. Donald Trump has something about covid -19 medicine like chloroquine or hydrochloroquine is this medicine that can solve our problem. They have also tested this medicine on various patients. What was the outcome? Something you can help us about. We don't now have to see financial we just have to covid-19 data or its outcome. Moreover china has also not reported any new case of covid. Infact they are bursting crackers.

  24. Brother can uh please share the sources from which uh obtain this in depth business model knowledge of a company

Leave a Reply

Your email address will not be published. Required fields are marked *