Gold loan financiers offer better opportunity than HDFC Bank right now: GreenEdge's Digant Haria

Digant Haria, founder of GreenEdge Wealth Services, says gold loan financiers offer a better opportunity right now than HDFC Bank, even as the bank works through a leadership change. Haria expects gold loans to overtake home loans and mortgages combined to become India's largest retail lending category within five to seven years.

"Gold loans will become the largest retail lending segment in the country. It will surpass home loans," Haria said.

Haria said gold loan volumes stand at around ₹16 lakh crore today, of which ₹6 lakh crore is retail, compared with agriculture loans of ₹10 to 11 lakh crore. He said the sector can grow 15-18% a year, against 12% for housing finance, driven by an inflationary gold cycle and lenders expanding their branch networks.

Haria named Muthoot Finance as his top pick in the segment, pointing to a valuation of 9.5 times current year earnings against a return on equity of 28%. He called it the cheapest large-cap lender available, cheaper than State Bank of India (SBI) despite the higher returns. He also named IIFL Finance, Capri Global, and Tamilnad Mercantile Bank as companies with exposure to the market, noting that Tamil Nadu alone holds 37% of India's gold.

Haria said the opportunity extends beyond gold into microfinance and personal loans, describing business momentum across these categories as strong heading into results season.

Turning to HDFC Bank, Haria said the emergence of Dinesh Kumar Khara as a candidate

for the top job points to a change in the bank's old guard. He said the board's decision not to extend the term of current CEO Sashidhar Jagdishan is the clearest sign of that shift.

"I think we will have to wait for another five, six months before very decent rerating can happen," Haria said.



Haria said HDFC Bank's core problem since its merger has been deposit growth rather than the corporate loan issues that ICICI Bank faced before its turnaround under Sandeep Bakhshi. He described the board dispute and governance lapses at the bank as secondary issues, though he said regulators have taken note of them.

Haria said HDFC Bank trades at 1.7 times trailing price to book, making it cheaper than Axis Bank among large private banks. He said this valuation, along with regulatory involvement, should limit further declines from the stock's current level near its 52-week low of ₹700 to ₹720.

"Downside is protected," Haria said, adding that the stock could see a small gain once a new leader is named.

Haria named Kaizad Bharucha and Bhavesh Zaveri as the two candidates under discussion. He said an internal appointment would settle the board dispute and support a faster re-rating, while an external pick would signal that regulators want bigger changes, extending the adjustment period.

Asked whether Bharucha's shorter potential term of two and a half years would count against him, Haria said it would not, since it would show the bank's internal problems are limited to a leadership rivalry rather than a structural issue.

For the full interview, watch the accompanying video



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