hdfc bank share price: Why is HDFC Bank & Bajaj Finance divergent in a bull market? Hemang Jani answers

RBI circular allowing extension of the period for which companies can defer the provisioning part in the NPL recognition, can lead to some technical bounceback in names like Mahindra & Mahindra Finance and LIC Housing, says Hemang Jani, Equity Strategist & Senior Group VP, MOFSL.

Why is the divergence happening now? HDFC Bank is down in a bull market and Bajaj Finance is up 23%. Why is that? They were supposed to be joined at the hip?
There’s nothing really wrong in terms of the performance but when in a sector, you are a leader and your actual performance is not showing that kind of a characteristic of industry beating growth and other players are doing much better in terms of growth and are commanding much lower valuation, then definitely there is going to be some sort of an underperformance and HDFC Bank has been going through that.

When the performance of HDFC Bank is compared with ICICI Bank and Axis Bank, we find that the growth that ICICI Bank has displayed in the last six quarters is way higher than HDFC Bank with much lower valuations. So part of the underperformance is coming because of that.

When we look at Bajaj Finance yes, in terms of performance it has been great and in NBFCs, you do not have a company which can actually outpace Bajaj Finance in terms of its leadership position. So, even if the company reports a slightly subdued kind of growth, people will take some comfort from the sheer balance sheet size, management pedigree and the kind of platform…

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