Although we have created Intrinsic Value Calculator for India Stock Market companies, we are seeing LESS people using it. So in this post “INTRINSIC VALUE OF HDFC BANK” we would like to Iterate with an Example how to create the same.
Update Due to Corona & Recession Impact lot of Short-Term & Medium-Term Investors are Shying away from Market. But we Advisor Team are buying Intrinsic Value Discounted Stocks as we look for Long Term!
(Remember Day-Traders, Short-Term & Medium-Term Investors will Buy High & Sell Low to Loose their Money – Don’t Follow them)
INTRINSIC VALUE OF HDFC BANK
HDFC BANK is undisputed Blue Chip of India. It is having Strong growth history in the past & present too. But is the Intrinsic Value good enough to enter at the current price.
Intrinsic Value ensures you are NOT buying a stock at Over-price!
How to calculate the Intrinsic Value of HDFC Bank?
- Go to screener.in > Enter HDFC Bank
- Find the following values
- EPS as 49.80
- EPS last year as 41.00
- EPS preceding year as 35.66
- Calculate the EPS Growth Average (You can use Calculator OR LINK)
- Growth from 35.66 to 41.00 is 14%
- Growth from 41.00 to 49.80 is 21%
- So Average is 17.5%
- Now open the Intrinsic Value Calculator LINK
- Enter EPS as 49.80
- Enter Growth as 17.5%
- Leave the remaining fields
- You will get the INTRINSIC VALUE as 1625
- You will also get the FAIR VALUE as 1138 (after 30% Discount)
DECISION MAKING
From the previous steps, you have to Compare the Fair Value with the Current Market Price of HDFC Bank.
The Current Market Price is Rs. 838 as of May 2020
As a result, the Current Market Price is lower than Fair Value it is a BUY Decision!
INTRINSIC VALUE OF YES BANK
Now let us try to find the Intrinsic Value of Yes Bank.
As you know Yes Bank is in trouble times now – So obviously the EPS Growth will be negative.