It's hard to overstate just how much global investors are captivated by HDFC Bank, India's biggest by market value. Not only does HDFC stock trade at almost the highest valuation among the world's largest banks, but international investors have been willing to pay a 20 percent premium over HDFC's local stock price to get their hands on the limited number of shares available to foreigners. The bank has reported annual profit growth of at least 20 percent every year since 1998-a feat unmatched by any of the world's 200 biggest lenders-and analysts say it will maintain that streak through at least March 2017. While the stock has risen almost 40 percent over the 12 months through April 2, analysts say it can climb further. "A 30 to 35 percent annual growth in earnings over the next three years is possible," says Jignesh Shial, an analyst at investment bank IDBI Capital in Mumbai. "If profit rises at that pace, there's room for valuations to go higher." It's not an unrealistic goal: Earnings have grown at an average annual rate of 33 percent over the past decade.
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