Overview
HDFC Group is one of the most respected groups of India operating in Finance sectors. All the companies of this Group operate in Finance related sector like Housing Finance, Banks, Insurance Products or Asset Management. Two companies from this Group are one of the top ten companies in India based on Market Capitalization.This speaks the Quality of management and reward it has reaped for Investors over the years.
HDFC Group recently crossed 10 trillion market cap combined second only to Tata Group. Two companies from the group are present in top ten companies of India based on the market capitalization. Note Tata group has approx 4 times more number of companies listed on exchanges compared to HDFC group.
You all might be aware of HDFC bank. HDFC Bank is part of this group of companies only. It is one of the best return giving bank to Investors. It is regarded as one of the best bets in Indian stock market. The safest nature high return yielding stock making it perfect candidate for long term investment.Most of the stocks from this group are investment grade stocks and always trade at at premium.You can add them to your stock watch list.
HDFC group company performance
Below is the performance of companies from this group. Note two companies HDFC AMC and HDFC Life are recent listing from the group so the performance of these companies are taken from the IPO listing price. Also for the other companies the performance is from last two decades. This gives complete idea about the returns it has given to investors. Note IPO listing price is used instead of IPO offer price as many investors do not get IPO allocation so using offer price may not do justice to them.
| Company | Return % |
|---|---|
| HDFC | 12429% |
| HDFC Bank | 30049% |
| HDFC Life | 55% |
| HDFC AMC | 0% |
Note HDFC AMC got listed in year 2018 and I have written a post on its IPO debut which you can read at this link. HDFC Life got listed in year 2017. So the data about them is around 5 years old. Both the stocks have not performed well for investors compared to the other two companies for which data is available for 20 years.
If you see top two companies have given more than 300 times and 125 times return to investors over the past two decades. They also give consistent dividends making them one of the best performing consistent stocks. The dividend yield has also been multi folded if you consider the price appreciation in the stock. So investors have made big money in these counters. However the last two entries have yet to perform compared to the bigger twins.
HDFC group company market cap
Below is the list of all companies from this company along with their market cap. I have categorized them based on the market cap categories like Large cap, Mid cap and Small cap. This makes it easier for you to pick the ones which are smaller in market cap compared to other companies from the group. Note the list is ordered in decreasing market cap. So the last company is having least market cap and first company has highest market cap.
| Company | Market Cap |
|---|---|
| HDFC Bank | Largecap |
| HDFC | Largecap |
| HDFC Life | Largecap |
| HDFC AMC | Largecap |
If you see all the companies from the group are Largecap. All of them are leaders in the sector they operate in. As mentioned earlier this is one of the finest financial groups of the country. Also it has three companies in Nifty50. The first three companies that is HDFC, HDFC Life and HDFC Bank are present in Nifty50. Since out of 4 three companies are part of Nifty50 making it one of the most successful corporate groups.
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HDFC group companies details
HDFC – Largest Housing Finance company
Housing Development Finance Corporation Limited or in short HDFC is one of the top ten Companies in India based on Market Capitalization. This is the first Company or umbrella company of the HDFC Group. It is one of the largest Financial services Company in India. It touches almost every aspect of financial business sphere. If we leave the subsidiaries then it is only in business of housing loans. Major loan products from the Company are
- Home Loans
- Plot Loans
- Rural housing loans
- Home Improvement loans
- Home extension loans
- Loan against property
- Commercial plot loans
- Commercial property loans
It also undertakes consultancy assignments in housing finance. It has taken many such projects in different countries of Asia, Africa and Eastern Europe. It has distribution network of 546 offices which is extended in major cities and towns of India.
It also has offices in Dubai, Singapore and London to cater needs of Non resident Indians. It is one of the oldest Companies which is in business of Home loans and have kept focus on the same business despite growing to become largest dedicated home loan Company in India.
The stock has performed well on stock exchanges. It is regarded as one of the safest bets on India stock exchanges. It is also one of the compounders in Indian market.The price appreciation for the stock is gradual and slow which is hall mark of a compounding Company. Leaving one or two occasions it has given positive returns for most of the years in this two decade long journey which makes it special Company.
I like the simple focus points of this Company states on its website clearly
- Increase Return on Equity (ROE) every year
- Consistent growth in Loan book
- Low Gross Non performing assets GNPA
- Low cost to income ratio.
These are the consistent growth strategies shared by the Company and is written clearly on its website. It has mentioned it and is following it. This is the reason Investors are valuing this Company so high. It has grown year after year maintaining the clear and slow growth trajectory.
HDFC Bank – One of too big to fail bank
HDFC Bank is one of the leading private sector banks in India. It is one of the top ten Companies of India based on Market Capitalization. There are two companies from HDFC Group in top ten Companies based on Market capitalization which is outstanding feat for the Group. It is also one of three too big to fail banks in India along with State Bank of India and ICICI bank.
As of now it has a banking network of 5,345 branches and 14,533 ATMs spread across 2,787 cities and towns. Based on market capitalization it is largest bank of India which is itself a great feat. It is also India’s largest private sector lender by assets.Below are the business verticals in which the Bank operates
- Wholesale Banking
- Primary targets are Large Blue chip manufacturing companies in India
- Retail Banking
- Full range of Financial products and banking services. It targets to have Salary accounts which is good initiative from Bank and offers excellent opportunity of cross selling other banking products
- Treasury
- Foreign Exchange and Derivatives
- Local currency money market and debt securities
- Equities
It is one of the most consistent performers on Indian stock market and is good dividend payers as well.It is considered as one of the safest investment in Indian stock market. It is also considered as one of the best compounding machines in the listed space. Those claims are not false considering the returns given by the Company and consistent performance both in terms of stock price and dividend yield it has given to investors.
These stocks are recommended to new investors who are starting their investment journey and are looking for best bets in Indian stock markets. The HDFC twins as people refer them commonly are such stocks which can be invested and can be considered as safe bets giving excellent returns in long term.
HDFC Life – One of largest private Life insurance company
HDFC Life is one of the India’s leading life insurance Companies. It is a joint venture between Housing Development Finance Corporation and Standard life Aberdeen PLC. Standard life Aberdeen PLC is global investment Company.The Standard life Aberdeen is one of the largest listed fund manager in UK. HDFC is major share holder in this joint venture with slightly more than 50% stake whereas the second partner has around 12% stake.
Below are the major business operations of this Company
- Protection Plans
- Retirement plans
- Savings and investment plans
- Women and Children’s plan
- Health Plans
- Term Insurance plans
The Company has wide range of products to cater different needs of Customers. All the products fall under umbrella of Life Insurance products. As of now the Company has 37 individual and 11 group products. It also provides 6 optional rider benefits.
It also has wholly owned subsidiary HDFC Pension management Company. The subsidiary was established for operation of Pension fund business under National Pension scheme in short NPS.It also has branches overseas to cater Non Resident Indians (NRI) customers.
Life Insurance companies are considered long term bets by many analysts. The reason is simple. Life Insurance penetration in India is very less. Also the private sector Company market share is less as well.Life Insurance Corporation of India LIC which is Government Entity has major market share in Life Insurance space with dominating 70% share. With such under penetration and dominating Government Entity analysts think it as long term bet in Indian context.
It will also be included in Nifty from July 2020 which is also positive for the Company. So the group will have three Companies in Nifty which lists only 50 Companies. This is great achievement by the Company.
HDFC AMC – One of the largest Asset management company
HDFC Asset Management Company in short HDFC AMC as the name suggests deals with Asset management. It looks after Mutual Fund business. This mutual fund Company is formed as joint venture between HDFC Group and Standard life investments. The Group hold more than 50% in this Company. Thus it is acting as a dominant partner in the partnership.
It is one of the top mutual fund Company in India based on Average Assets under management. Note the company will be under the HDFC Bank. This will help cross sell products of this company by the parent company. This is the only company from the group which is not present in Nifty50. Below are the key categories of Mutual fund products offered by this Company
- Diversified Equity
- Thematic Equity
- Equity Linked Savings Scheme ELSS
- Hybrid
- Solution Oriented
- Theme based debt
- Duration based debt
- Index/ETF
- Gold ETF/FOF
For Customers it also offers customized goal based solutions so that they can easily select Mutual Fund of their choice. Based on the goals it offers below products
- Wealth Creation
- Tax Saving
- Children’s Fund
- Retirement planning
- Regular Income
People still invest heavily in Real Estate be it land or apartment or gold or keep it safe as bank fixed deposits. The investment into Mutual Funds is very limited compared to earning population in India.So there is scope of growth both in number of people joining Mutual Fund investment wagon as well as increasing their allocation in mutual funds.
This sector is asset light and as mentioned is under penetrated in India. The management pedigree is very formidable. All these reasons are given by analyst who are bullish on this stock and are termed as long term investment option. But this stock has not performed as per the expectation of many investors as of this writing but this has not changed the outlook about this stock.
Conclusion
People hunt every place to get an stock which will give compounding returns over the years. They forget to search or track stock which has given the same return they want over the years and still going strong.For the Beginners and Experienced Investors it is good to invest some money in very solid companies giving steady returns over the years. They can play with rest of the money and invest in multi bagger stocks after research.
You can track HDFC Group of companies and enter those stocks when you think it is the right time. Also I have prepared list of stocks from other popular groups which are also giving good returns to investors over the year.So you can include them as well in your list.
For fundamental investment it is best to evaluate stock based on management pedigree, corporate governance and growth opportunities. This is the reason I have listed performance of the group so that investors can get an idea whether the stocks have made money for investors in long turn as well. Also the market capitalization is also quoted so that people are aware about the size of the company.