Target: ₹900
CMP: ₹642.25
HDB Financial Services (HDBFS) – a blue-chip heritage paired with a formidable low-cost borrowing moat. The combination bestows an inherent advantage upon the company to command sustainable, scalable and high-margin growth. Notably, HDBFS has been strategically firming up an asset franchise stronghold (over ₹1 lakh crore, as of FY25) in India’s underserved hinterlands (about 70 per cent) branches in tier-4+ locations).
Separately, despite macroeconomic headwinds, it delivered an over 20 per cent AUM CAGR (FY14–25), bolstering its leading NBFC status. A decadal around 2 per cent credit cost average is testament to HDBFS’ cycle-tested underwriting and risk-management protocols. HDBFS’ focus on direct customer sourcing – accounts for over 80 per cent of FY25 disbursements – facilitates customer quality and operational efficiency.
We initiate coverage at Buy and a TP of ₹900, basis 3x Sep’27E BVPS.
Key risks: Delayed Management expects growth to exceed nominal GDP by 6–7 per cent in the near-term. While positive trends in CV volumes suggest that HDBFS is well-positioned to benefit from a CV upcycle, the company faces risks from market share loss and overall sluggishness in the CV segment; HDBFS operates in highly competitive segments like LAP, CV and gold. Most of these segments are currently witnessing intense competition from banks; and AI disruption may lead to higher unemployment (especially in IT sector) and part of its consumer finance business is directly exposed to the salaried segment.
Published on March 13, 2026