We recently compiled a list of the 10 Best Indian Stocks for Next 10 Years.In this article, we are going to take a look at where HDFC Bank Limited (NYSE:HDB) stands against the other Indian stocks.
India's strong growth trajectory remains a compelling narrative on the back of remarkable advancements throughout sectors, placing the nation as a formidable player in the global arena. With a youthful population, an ever-expanding digital economy, and a strong and reliable manufacturing base, India continues to reap the benefits of its demographic dividend and embrace innovation to drive sustainable economic development. In the fiscal year 2023-24, foreign portfolio investments came in at INR 3,39,066 crore, with INR 1,71,248 crore seen so far in 2024-25 (as per the release dated September 27 by Press Information Bureau, Government of India). This healthy influx of capital demonstrates the country's resilience and the attractiveness of its financial landscape.
India's digital economy has been tagged as one of the fastest-growing in the world, strongly helping the nation's technological landscape. The government's Digital India initiative played a critical role in the transformation. The initiatives have increased internet penetration and boosted the broader digital infrastructure throughout the country.
Jamie Dimon's Views on Indian Economy
As per Jamie Dimon, India remains well-placed to become a $7 trillion economy by 2030 as a result of the digital and physical infrastructure, which continues to attract multinational companies under the governance of Prime Minister Narendra Modi. Jamie Dimon recalled visiting India in 2005 and went on to point out the development the country has witnessed over the years. This development is evident as India continues to attract multinational companies to invest.
Additionally, the Chief Executive lauded the digital and physical infrastructure, which includes the Aadhaar system, GST reforms, easing regulations, etc. Collectively, these are expected to act as growth drivers. Jamie Dimon also highlighted that the growth potential of India remains strongly linked to the country's liquidity and valuation dynamics. With the world's fourth-largest stock market, the country saw daily average cash-trading levels increase threefold from the pre-pandemic levels. He also highlighted that India has a demographic edge, which is the main reason for the optimism about India's long-term growth prospects.
With countries in the West facing challenges related to aging populations and labour shortages, India has a young and dynamic workforce which should become the nation's most valuable asset. Notably, the next 3 decades hold strong potential for India's sustained growth and prosperity.
In the recent past, the Chief executive praised India's boosting financialization of saving, ramping up infrastructure, and allowing more spaces for foreign investment.
India's Economic Growth Outlook
India has been tagged as one of the fastest-growing economies in the world, with real GDP expected to grow by 6.5% in 2024, as per J.P. Morgan Economics Research. If the International Monetary Fund (IMF) data is to be believed, India is expected to clock a growth rate of 6.1% over the upcoming 5 years. This will make India the world's third-largest economy by 2027, after the US and China. Indian equity markets touched new all-time highs this year. Apart from the volatility during the general election, the country's stocks consistently outperformed Emerging Market peers.
Additionally, the large bank highlighted that, since the pandemic-low in March 2020, the blue-chip NSE Nifty 50 saw a whopping increase of more than 200%, with the stock market's total market cap now standing at ~$5 trillion. This is because investors have become increasingly positive about the nation's long-term economic growth potential. The traction India's manufacturing sector is gaining under supply chain diversification, sustainable and pro-industry policies, and improving renewable energy capacity are expected to act as tailwinds. The bank believes that the Indian government has outlined ambitious plans for goods exports to reach $1 trillion annually by 2030, as the country aims to be a top-most alternative for companies that are looking to diversify their supply chains away from China.
Our methodology
To list the 10 Best Indian Stocks for Next 10 Years, we did an extensive online search to extract the stocks of Indian companies that trade at the US exchanges. After narrowing down the list, we arranged the stocks in ascending order of their hedge fund sentiments.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A business owner tallying their profits in the back office of a local banking branch.
HDFC Bank Limited (NYSE:HDB) provides banking and financial services to individuals and businesses in India, Bahrain, Hong Kong, and Dubai.
Wall Street analysts remain optimistic about the growth prospects of HDFC Bank Limited (NYSE:HDB), with the expected stabilization of net interest margin (NIM) in the upcoming quarters. HSBC expects that HDFC Bank Limited (NYSE:HDB) should see a modest increase of 10 bps in NIM over the period from the fiscal year 2025 to 2027. Furthermore, HSBC expects a gradual improvement in the core performance of the bank.
Recently, Bernstein SocGen Group highlighted that HDFC Bank Limited (NYSE:HDB) is reportedly engaging in the sale of portions of its auto and home loans portfolio. This will potentially amount to ~INR 700 billion, which translates to ~3% of its total loan book. This move by HDFC Bank Limited (NYSE:HDB) forms part of its broader strategy of rebalancing its balance sheet. It targets to reduce its Loan to Deposit Ratio (LDR) and lower its proportion of borrowings in its liabilities.
HDFC Bank Limited (NYSE:HDB) saw a faster-than-expected reduction in borrowings. Bernstein SocGen Group stated that, in Q1 2025, HDFC Bank Limited (NYSE:HDB) saw a run-down of ~INR 600 billion in borrowings, outpacing the expected figure of ~INR 250 billion. These measures should help the bank in adjusting its financial structure. These actions demonstrate a proactive approach to managing financial health.
Collectively, the measures are expected to help HDFC Bank Limited (NYSE:HDB) achieve a more stable and efficient balance sheet, stated Bernstein SocGen Group. As per Wall Street, the shares of HDFC Bank Limited (NYSE:HDB) have an average price target of $70.00.
Investment management company Ave Maria recently released its first quarter 2024 investor letter. Here is what the fund said:
“HDFC Bank Limited (NYSE:HDB) is a well-managed bank in India that has a track record of gobbling up market share and creating shareholder value. The bank has a long runway for growth, is overcapitalized, and is a highly skilled underwriter.”
Overall HDB ranks 1st on our list of the best Indian stocks for the next 10 years. While we acknowledge the potential of HDB as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than HDB but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
