HDFC Group stocks, once Dalal Street’s darlings, are reeling under investor apathy as unrelenting foreign fund selling, premium valuations and change of leadership have resulted in underperformance on the bourses. Shares of HDFC Bank, HDFC, HDFC Life and HDFC Asset Management Company (AMC) have been laggards so far in 2022, and in the past one- and two-year periods.
Since January, HDFC Bank has fallen 7%, HDFC has declined 12%, HDFC Life has dropped 14%, and HDFC AMC has lost 14%. The Nifty fell 4.3% during the period.
HDFC Group stocks have traded at premium valuations for over a decade as they were considered stable bets given their consistent earnings growth and high corporate governance levels. HDFC Bank was trading at over four times its book value in early 2020. It was the most expensive bank globally then. The massive sell-off in the stock has dragged down its valuation by 20% in two years. Foreign investor holding in the bank has declined from 39.35% to 37.47% in the last year.
Premium valuations of all the listed firms of HDFC Group vis-a-vis their peers have now come down. HDFC AMC which traded at a PE ratio of 72 times in January 2020, is now 34 times after the stock price correction.
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R♥Vi
Fund Wallet is a AMFI registered Distributor of Mutual Funds. This is not a Investment Recommendation. source:ET
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