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HDFC Bank Piotroski F-Score

: 4 (As of Today)
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The zones of discrimination were as such:

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

HDFC Bank has an F-score of 4 indicating the company's financial situation is typical for a stable company.

NYSE:HDB' s Piotroski F-Score Range Over the Past 10 Years
Min: 1   Med: 4   Max: 6
Current: 4

1
6

During the past 13 years, the highest Piotroski F-Score of HDFC Bank was 6. The lowest was 1. And the median was 4.

How is the Piotroski F-Score calculated?

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Jun20) TTM:Last Year (Jun19) TTM:
Net Income was 844.38024989132 + 1042.2743044576 + 976.57891136205 + 914.99807813472 = $3,778 Mil.
Cash Flow from Operations was 0 + 0 + 0 + 0 = $0 Mil.
Revenue was 2514.1955659015 + 2929.0537644382 + 3052.8704918429 + 2785.7272113669 = $11,282 Mil.
Average Total Assets from the begining of this year (Jun19)
to the end of this year (Jun20) was
(182344.62010722 + 195803.25195271 + 196093.35733669 + 214115.01686157 + 210844.12153585) / 5 = $199840.07355881 Mil.
Total Assets at the begining of this year (Jun19) was $182,345 Mil.
Long-Term Debt & Capital Lease Obligation was $21,092 Mil.
Total Assets was $210,844 Mil.
Total Liabilities was $186,515 Mil.
Net Income was 749.48220687098 + 788.59318595402 + 846.90780621533 + 818.01752464403 = $3,203 Mil.

Revenue was 2345.0114073596 + 2470.2801373934 + 2584.6638700811 + 2788.2775119617 = $10,188 Mil.
Average Total Assets from the begining of last year (Jun18)
to the end of last year (Jun19) was
(159375.87992329 + 170968.58929216 + 0 + 191109.0682765 + 182344.62010722) / 5 = $175949.5393998 Mil.
Total Assets at the begining of last year (Jun18) was $159,376 Mil.
Long-Term Debt & Capital Lease Obligation was $14,541 Mil.
Total Assets was $182,345 Mil.
Total Liabilities was $159,915 Mil.

*Note: If the latest quarterly/semi-annual/annual total assets data is 0, then we will use previous quarterly/semi-annual/annual data for all the items in the balance sheet.

Profitability

Question 1. Return on Assets (ROA)

Net income before extraordinary items for the year divided by Total Assets at the beginning of the year.

Score 1 if positive, 0 if negative.

HDFC Bank's current Net Income (TTM) was 3,778. ==> Positive ==> Score 1.

Question 2. Cash Flow Return on Assets (CFROA)

Net cash flow from operating activities (operating cash flow) divided by Total Assets at the beginning of the year.

Score 1 if positive, 0 if negative.

HDFC Bank's current Cash Flow from Operations (TTM) was 0. ==> Negative ==> Score 0.

Question 3. Change in Return on Assets

Compare this year's return on assets (1) to last year's return on assets.

Score 1 if it's higher, 0 if it's lower.

ROA (This Year)=Net Income/Total Assets (Jun19)
=3778.2315438457/182344.62010722
=0.02072028

ROA (Last Year)=Net Income/Total Assets (Jun18)
=3203.0007236844/159375.87992329
=0.02009715

HDFC Bank's return on assets of this year was 0.02072028. HDFC Bank's return on assets of last year was 0.02009715. ==> This year is higher. ==> Score 1.

Question 4. Quality of Earnings (Accrual)

Compare Cash flow return on assets (2) to return on assets (1)

Score 1 if CFROA > ROA, 0 if CFROA <= ROA.

HDFC Bank's current Net Income (TTM) was 3,778. HDFC Bank's current Cash Flow from Operations (TTM) was 0. ==> 0 <= 3,778 ==> CFROA <= ROA ==> Score 0.

Funding

Question 5. Change in Gearing or Leverage

Compare this year's gearing (long-term debt divided by average total assets) to last year's gearing.

Score 0 if this year's gearing is higher, 1 otherwise.

Gearing (This Year: Jun20)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Jun19 to Jun20
=21091.808362954/199840.07355881
=0.10554344

Gearing (Last Year: Jun19)=Long-Term Debt & Capital Lease Obligation/Average Total Assets from Jun18 to Jun19
=14540.571856805/175949.5393998
=0.08264058

HDFC Bank's gearing of this year was 0.10554344. HDFC Bank's gearing of last year was 0.08264058. ==> Last year is lower than this year ==> Score 0.

Question 6. Change in Working Capital (Liquidity)

Compare this year's current ratio (current assets divided by current liabilities) to last year's current ratio.

Score 1 if this year's current ratio is higher, 0 if it's lower

* Note that for banks and insurance companies, there's no Total Current Assets and Total Current Liabilities reported. Thus, we use Total Assets and Total Liabilities to calculate current ratio for banks and insurance companies.

Current Ratio (This Year: Jun20)=Total Assets/Total Liabilities
=210844.12153585/186515.32274788
=1.13043861

Current Ratio (Last Year: Jun19)=Total Assets/Total Liabilities
=182344.62010722/159914.50394881
=1.14026318

HDFC Bank's current ratio of this year was 1.13043861. HDFC Bank's current ratio of last year was 1.14026318. ==> Last year's current ratio is higher ==> Score 0.

Question 7. Change in Shares in Issue

Compare the number of shares in issue this year, to the number in issue last year.

Score 0 if there is larger number of shares in issue this year, 1 otherwise.

HDFC Bank's number of shares in issue this year was 1832.603. HDFC Bank's number of shares in issue last year was 1836.913. ==> There is smaller number of shares in issue this year, or the same. ==> Score 1.

Efficiency

Question 8. Change in Gross Margin

Compare this year's gross margin (Gross Profit divided by sales) to last year's.

Score 1 if this year's gross margin is higher, 0 if it's lower.

* Note that for banks and insurance companies, there's no Gross Profit reported. Thus, we use net income instead of gross profit and calculate Net Margin for this score.

Net Margin (This Year: TTM)=Net Income/Revenue
=3778.2315438457/11281.847033549
=0.33489477

Net Margin (Last Year: TTM)=Net Income/Revenue
=3203.0007236844/10188.232926796
=0.31438236

HDFC Bank's net margin of this year was 0.33489477. HDFC Bank's net margin of last year was 0.31438236. ==> This year's net margin is higher. ==> Score 1.

Question 9. Change in asset turnover

Compare this year's asset turnover (total sales for the year divided by total assets at the beginning of the year) to last year's asset turnover ratio.

Score 1 if this year's asset turnover ratio is higher, 0 if it's lower

Asset Turnover (This Year)=Revenue/Total Assets at the Beginning of This Year (Jun19)
=11281.847033549/182344.62010722
=0.06187102

Asset Turnover (Last Year)=Revenue/Total Assets at the Beginning of Last Year (Jun18)
=10188.232926796/159375.87992329
=0.06392581

HDFC Bank's asset turnover of this year was 0.06187102. HDFC Bank's asset turnover of last year was 0.06392581. ==> Last year's asset turnover is higher ==> Score 0.

Evaluation

Piotroski F-Score= Que. 1+ Que. 2+ Que. 3+Que. 4+Que. 5+Que. 6+Que. 7+Que. 8+Que. 9
=1+0+1+0+0+0+1+1+0
=4

Good or high score = 7, 8, 9
Bad or low score = 0, 1, 2, 3

HDFC Bank has an F-score of 4 indicating the company's financial situation is typical for a stable company.

HDFC Bank  (NYSE:HDB) Piotroski F-Score Explanation

The developer of the system is Joseph D. Piotroski is relatively unknown accounting professor who shuns publicity and rarely gives interviews.

He graduated from the University of Illinois with a B.S. in accounting in 1989, received an M.B.A. from Indiana University in 1994. Five years later, in 1999, after earning a Ph.D. in accounting from the University of Michigan, he became an associate professor of accounting at the University of Chicago.

In 2000, he wrote a research paper called "Value Investing: The Use of Historical Financial Statement Information to Separate Winners from Losers" (pdf).

He wanted to see if he can develop a system (using a simple nine-point scoring system) that can increase the returns of a strategy of investing in low price to book (referred to in the paper as high book to market) value companies.

What he found was something that exceeded his most optimistic expectations.

Buying only those companies that scored highest (8 or 9) on his nine-point scale, or F-Score as he called it, over the 20 year period from 1976 to 1996 led to an average out-performance over the market of 13.4%.

Even more impressive were the results of a strategy of investing in the highest F-Score companies (8 or 9) and shorting companies with the lowest F-Score (0 or 1).

Over the same period from 1976 to 1996 (20 years) this strategy led to an average yearly return of 23%, substantially outperforming the average S&P 500 index return of 15.83% over the same period.


HDFC Bank Piotroski F-Score Related Terms

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