Yahoo Finance HDFC Bank Limited (NSE:HDFCBANK): What Does The Future Look Like?
In March 2018, HDFC Bank Limited (NSEI:HDFCBANK) released its most recent earnings update. Generally, analyst forecasts seem fairly subdued, with earnings expected to grow by 17.73% in the upcoming year compared with the higher past 5-year average growth rate of 20.27%. Presently, with earnings at ₹185.10B, we should see this growing to ₹217.92B by 2019. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for HDFC Bank in the longer term. Investors wanting to learn more about other aspects of the company should research its fundamentals here. Check out our latest analysis for HDFC Bank
How will HDFC Bank perform in the near future?
The longer term expectations from the 37 analysts of HDFCBANK is tilted towards the positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2021, HDFCBANK’s earnings should reach ₹323.65B, from current levels of ₹185.10B, resulting in an annual growth rate of 17.91%. EPS reaches ₹120.17 in the final year of forecast compared to the current ₹71.7 EPS today. The primary reason for earnings growth is due to cost cutting activities, as revenues is expected to grow much slower than earnings. However, the near term margin expansion is expected to shrink heading into 2021, from the current levels of 35.33% to 33.73%.
Next Steps:
Future outlook is only one aspect when you’re building an investment case for a stock. For HDFC Bank, there are three essential factors you should further examine:
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Valuation: What is HDFC Bank worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether HDFC Bank is currently mispriced by the market.
Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of HDFC Bank? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
