Multi-Factor Analysis Part 2, HDFC study case

Today we revisit one of the most widely used frameworks in modern investing: multi-factor analysis.

What are the quantitative factors that help explain price behavior?

Many investors describe themselves as stock-pickers or allocators, but a significant part of performance is often linked to factors behind the returns.

The six key factors are: Momentum, Value, Quality, High Dividend, Low Volatility, and Size.

Some of you asked for a study of HDFC Bank, following the earlier episode discussing Michael Porter’s framework.

Today, we use HDFC Bank as an educational example to illustrate how a factor-based perspective works.

Important disclaimer:

We do not have any relationship with HDFC Bank or its management.

We do not receive any compensation and have no financial interest in mentioning this company.

This analysis is purely illustrative and should not be interpreted as a buy, hold, or sell signal for any security.

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FACTOR 1 — MOMENTUM

“HDFC Bank has gained roughly 14% this year, relative to a generally strong environment for Indian financials. Momentum remains positive, with the stock trading above several widely watched moving averages. Some foreign investors have shown renewed interest following the merger with HDFC Ltd.”

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FACTOR 2 — VALUE & QUALITY

“At a forward P/E around 21, the stock trades at a valuation that reflects its quality profile:

• Return on Equity above 17%

• Gross NPA near 1.2%

• Cost-to-income ratio below 38%

This is not a judgment of whether the stock is ‘cheap’ or ‘expensive’ — only an illustration of how factor investors think about value and quality attributes.”

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FACTOR 3 — VOLATILITY, SIZE & DIVIDEND

“With a beta below 1, the stock tends to move somewhat less than the broader market.

HDFC Bank is India’s largest private-sector lender, with a market capitalization above 160 billion U.S. dollars.

Its dividend yield is modest, near 1%, with retained earnings supporting long-term expansion.”

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🧩 FACTORS COMBINED — MONEY VETERANS MATRIX

4.25 / 5

Conclusion: In this purely illustrative model, HDFC Bank scores around 4.25 out of 5, resembling a “Quality + Momentum” factor profile.

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FACTOR VERDICT

“HDFC Bank is widely followed by domestic and international investors as a large Indian financial institution with a long track record.

This example helps show how factor frameworks are applied — again, for educational purposes only.”

“I’m Maya, and this is Money Veterans.

Less noise. More strategy.”

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FINAL TAKEAWAY

1. The shutdown’s effects aren’t fully behind us.

2. Valuation pressure remains visible in Tech and AI segments.

3. Market dynamics continue to rotate — something many professionals monitor carefully.