Like everything relating to India and China, HDFC Bank's
For the period from April through June, the Indian banking company's results clocked in more than 32% above last year's. HDFC earned 10 rupees per Indian share, up from 7.6 rupees during last year's comparable period. With each HDFC American depositary receipt being equivalent to three shares, that means HDFC earned 30 rupees, or $0.75 a share, per ADR during the period. (One American dollar is equivalent to about 40 rupees.)
Total customer assets grew from about 4.51 billion rupees (about $6.2 billion) to approximately 5.91 billion rupees (about $8.1 billion), a staggering increase of nearly 30%. Deposits grew by more than 34%, and it added 69 branches, for a total of 753 outlets.
Aside from the minor participation of financial behemoths such as Citigroup
Given the potential growth opportunity for banking in India alone, it's easy to see why HDFC has been garnering a lot of attention. Unfortunately, that attention and growth come at a high price. HDFC currently trades for more than 30 times earnings per ADR, while ICICI fetches a similarly rich 33 times earnings.
Yet if you believe in India's economic rise, you might believe that such rich multiples are justifiable. With HDFC's revenues and earnings growing at more than 30%, you'll pay about 1 times growth for a country with more than 3 times the population of the United States. In other words, Fools shouldn't let HDFC's seemingly rich valuation scare them off from doing further due diligence.
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