Portfolio Manager Eswar Menon of Geneva Advisors says HDFC Bank Limited (ADR) (HDB) is a bank that is well-managed and well-positioned to take advantage of country-level changes in India.
“We believe they can continue to grow for the next five to 10 years, thanks to the changes the government is making and the fact that it is a very well-run with a solid balance sheet. They should grow earnings 20%-plus over the next five years,” Menon said.
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HDFC Bank has continued to gain market share over the last 20 years, Menon says, and the factors driving growth in India right now are very good for the bank, particularly the rise of the middle class and purchasing power of the rural population.
“India is under-banked; its demographics are great. We think India is entering a period when economic growth is going to arise. India last year did about 5.5% GDP growth. We think that’s going to steadily increase over the next three to five years where you probably reach 7% to 8% levels of growth,” Menon said.
“This is a bank which we think is well-positioned for the next five to 10 years in terms of providing opportunities for the investors. We think the potential of the HDFC Bank is pretty strong,” Menon added.
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