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HDFC Bank Limited (HDB) Benefitted From the Strong Growth of the Indian Economy

Polen Capital, an investment management company, released its “Polen International Growth Strategy” fourth-quarter 2023 investor letter. A copy of the same can be downloaded here. The strategy rose 15.23% (net of fees) in the fourth quarter compared to a 9.75% return for the MSCI ACWI (ex-USA) index. Investor sentiment hit its lowest point in October, paving the way for a strong rally in the final months of the year. Quarterly portfolio performance was driven by share price appreciation in the information technology, healthcare, and consumer discretionary sectors. For the full year, the strategy appreciated 27.73% (net of fees) compared to a 15.62% return for the index. In addition, please check the fund’s top five holdings to know its best picks in 2023.

Polen International Growth Strategy featured stocks like HDFC Bank Limited (NYSE:HDB) in its Q4 2023 investor letter. Headquartered in Mumbai, India, HDFC Bank Limited (NYSE:HDB) offers banking and financial services. On March 5, 2024, HDFC Bank Limited (NYSE:HDB) stock closed at $54.93 per share. One-month return of HDFC Bank Limited (NYSE:HDB) was -1.26%, and its shares lost 19.22% of their value over the last 52 weeks. HDFC Bank Limited (NYSE:HDB) has a market capitalization of $139.09 billion.

Polen International Growth Strategy stated the following regarding HDFC Bank Limited (NYSE:HDB) in its fourth quarter 2023 investor letter:

"HDFC Bank Limited (NYSE:HDB) is the largest private sector bank in India. It has benefited from the strong growth of the Indian economy over the past two decades while taking significant share from its less well-run public-sector competitors. We expect these trends to remain in place for at least the next five years. More recently, HDFC Bank’s share price has stagnated after its merger with parent company, HDFC Ltd. After the completion of the merger in Q3 2023, the bank’s margins and returns on capital have deteriorated slightly, owing to its parent company’s higher cost of funding. We expect in the coming years, HDFC Bank will integrate its parent’s operations and replace its higher-cost funds with lower-cost deposits. If it continues to execute on its strategy well, then a period of outsized earnings growth could follow. Meanwhile, valuations trade at an attractive level of 17x forward earnings, a level not much above its 2008 low valuations. Given this, we increased our position to reflect a more full-sized position."

A business owner tallying their profits in the back office of a local banking branch.

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HDFC Bank Limited (NYSE:HDB) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, HDFC Bank Limited (NYSE:HDB) was held by 41 hedge fund portfolios, up from 38 in the previous quarter, according to our database.

We discussed HDFC Bank Limited (NYSE:HDB) in another article and shared the list of best bank stocks to invest in for long term. In addition, please check out our hedge fund investor letters Q4 2023 page for more investor letters from hedge funds and other leading investors.

 

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Disclosure: None. This article is originally published at Insider Monkey.