SBI vs HDFC Bank: Which is better long term Investment?

In 2024, SBI surpassed HDFC Bank, growing more than 37% while the latter fell more than 5%. When comparing SBI vs HDFC Bank, investors are taking long-term investing considerations like stock price patterns and earnings reports into account.

Although the banking stock may have been a poor performer against the Nifty in the last 6 to 12 months, it contains massive long-term growth potential due to the fact that India is still significantly under banked.

In 2024, the Nifty Bank index has increased by 8.5 percent so far, while the benchmark Nifty has increased by almost 13 percent. Nifty Bank has gained about 17 percent over the last year, while the Nifty has increased by about 26 percent. Private banks have seen a more severe correction in the banking industry than their public sector rivals. Analysts do predict a quick rebound for the financial industry as a whole, though.

In this case, State Bank of India (SBI) vs. HDFC Bank is a crucial blue-chip lender decision for long-term investors.

Stock Price Trend

SBI increased by about 4% in July, continuing its upward trend for the sixth consecutive month. Prior to that, it increased by 2.2% in June, 0.5% in May, 9.8% in April, 0.5% in March, and 16.6% in February. But in January, the stock was down just 0.08 percent, flat but still in the negative.

On the other hand, HDFC Bank reduced its growth rate by 4 percent in July after recording expansion for four straight months. Thus, it rose in June, by 10%; in May, by 0. Initially, 75 percent of them planned to leave, while in April, the share was down by 5 percent, and in March, by 3 percent. 2 percent. However, the stock had some retracement in the first two months of the year 2024; in February, it was down by 4% and in the month of March it was down by 14%. 4% in January.

After three years, SBI has come out on top in the long run. While HDFC Bank has gained merely 6.5 percent, it has increased by 105 percent.

Between SBI and HDFC Bank, which blue-chip lender should you pick for long term?

Jignesh Shial, Director – Research; Head of BFSI Sector at InCred Capital

Because of its enhanced reach, detailed book, and price control, we favor HDFC Bank. We anticipate that the bank’s return ratios will rise, driven by growing cross-selling and the maturity of its younger branches. We also choose SBI since it has a larger retail base and enough liquidity to offer competitive pricing.

Vinod Jhaveri, Independent Analyst, Pure Technicals

For the very basic reason that HDFC Bank’s credit deposit ratio is at 110% while SBI’s is at 74%, it is wise to choose SBI over private sector bank HDFC Bank in the long run. The RBI instructed all banks in January that the C/D ratio should be between 80 and 85%. One issue with the RBI’s announcement is that higher ratio banks would need to cut lending and boost deposits in order to lower the C/D ratio. It implies that earnings will decrease as a result until the ratio reaches the 80–85% level. A higher C/D ratio will prevent HDFC Bank from rising quickly. It may take a few quarters for HDFC Bank to get this ratio down to 80–85.

Atul Parakh – CEO, Bigul

As seen, both SBI and HDFC Bank offer benefits although the decision as to which to invest depends on persons’ investment goals and appetite towards risks. That’s why HDFC Bank is considered to be the best for many experts due to healthy growth rates, low prices and long-term prospects. They also point to SBI’s lower C/D ratio and more significant upside as a reason long-term investors can overlook this metric. Any person who aspires to achieve the optimal risk-reward balance in ones investment portfolio would be wise to invest in both.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of NiftyTrader. We advise investors to check with certified experts before taking any investment decisions.