HDFC Bank (NYSE: MUFG) and Mitsubishi UFJ Financial Group (NYSE:MUFG) are both large-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their valuation, institutional ownership, profitability, earnings, dividends, risk and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for HDFC Bank and Mitsubishi UFJ Financial Group, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
HDFC Bank 0 0 0 0 N/A
Mitsubishi UFJ Financial Group 0 0 1 0 3.00

Valuation and Earnings

This table compares HDFC Bank and Mitsubishi UFJ Financial Group’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
HDFC Bank $14.81 billion 5.86 $2.74 billion $3.11 32.40
Mitsubishi UFJ Financial Group $54.79 billion 1.47 $11.05 billion $0.71 8.56

Mitsubishi UFJ Financial Group has higher revenue and earnings than HDFC Bank. Mitsubishi UFJ Financial Group is trading at a lower price-to-earnings ratio than HDFC Bank, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares HDFC Bank and Mitsubishi UFJ Financial Group’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
HDFC Bank 18.32% 15.01% 1.55%
Mitsubishi UFJ Financial Group 16.35% 6.56% 0.36%

Insider & Institutional Ownership

17.3% of HDFC Bank shares are owned by institutional investors. Comparatively, 1.1% of Mitsubishi UFJ Financial Group shares are owned by institutional investors. 1.0% of HDFC Bank shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

HDFC Bank pays an annual dividend of $0.55 per share and has a dividend yield of 0.5%. Mitsubishi UFJ Financial Group pays an annual dividend of $0.13 per share and has a dividend yield of 2.1%. HDFC Bank pays out 17.7% of its earnings in the form of a dividend. Mitsubishi UFJ Financial Group pays out 18.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. HDFC Bank has increased its dividend for 5 consecutive years.

Volatility and Risk

HDFC Bank has a beta of 1.09, indicating that its share price is 9% more volatile than the S&P 500. Comparatively, Mitsubishi UFJ Financial Group has a beta of 1.74, indicating that its share price is 74% more volatile than the S&P 500.

Summary

HDFC Bank beats Mitsubishi UFJ Financial Group on 10 of the 15 factors compared between the two stocks.

HDFC Bank Company Profile

HDFC Bank Limited provides a range of banking and financial services to individuals and businesses in India, Bahrain, Hong Kong, and Dubai. The company operates in Treasury, Retail Banking, Wholesale Banking, and Other Banking Business segments. It accepts savings accounts, salary accounts, current accounts, fixed and recurring deposits, demat accounts, safe deposit lockers, and rural accounts, as well as offshore accounts and deposits. The company also offers personal, business, home, consumer durable, car, two wheeler, gold, educational, rural, and term loans; loans for professionals; loans against property, securities, and assets; overdrafts; government sponsored programs; and working capital, healthcare, channel, short term, structured, dealer, and vendor finance, as well as agricultural lending. In addition, it provides credit, debit, and prepaid cards; private banking services; export, import, remittance, bank guarantees, and letter of credit services, as well as merchant and cash management services; life, health, motor, travel, and home insurance products; and investment products, such as mutual funds, equities and derivatives, IPOs, and bonds. Further, the company offers bill discounting, real time gross settlement, bankers to right/public issue, forex, money market, employees trusts, and tax collection services; and investment banking services in the areas of project appraisal, structured finance, loan syndication, debt capital markets, equity placement, mergers and acquisitions, corporate advisory, and capital market advisory services. Additionally, it provides correspondent banking, settlement, custodial, disbursement, clearing, and administrative and fiduciary support services, as well as online and mobile banking services. As of March 31, 2018, the company operated a network of 4,787 branches and 12,635 ATMs in 2,691 cities/towns. HDFC Bank Limited was founded in 1994 and is based in Mumbai, India.

Mitsubishi UFJ Financial Group Company Profile

Mitsubishi UFJ Financial Group, Inc., a bank holding company, provides financial services in Japan and internationally. Its Retail Banking Business Group segment offers a range of products and services, such as bank deposits, loans, asset management and administration services, investment products, and settlement services. This segment also provides annuity, single premium whole life, flat-rate premium whole life, medical, cancer, and nursing-care insurance products; testamentary trust services; housing loans; Internet banking services; and credit cards. The company's Corporate Banking Business Group segment provides loans and fund management, and remittance and foreign exchange services; securities businesses, syndicated loans, and structured finance; investment banking services; and transaction and trust banking services. Its Trust Assets Business Group segment offers asset management and administration services for products, such as pension trusts and security trusts. This segment also provides a range of services to corporate and other pension funds comprising pension fund management and administration, advice on pension schemes, and payment of benefits to scheme members. The company's Global Business Group segment offers project finance, export credit agency, and financing through asset-backed commercial papers; and investment banking services, such as debt and equity issuance and M&A advisory services, as well as consumer finance, investment, asset management, and other financial products and services to individuals, large corporations, financial institutions, and sovereign and multinational organizations. Its Global Markets Business Group segment offers financing, hedging, and investing solutions to retail, corporate, institutional, and governmental customers; and asset and liability management services. Mitsubishi UFJ Financial Group, Inc. was founded in 1880 and is headquartered in Tokyo, Japan.

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