| Photo Credit:
Dado Ruvic
Target: ₹860
CMP: ₹800.10
HDB Financial Services (HDB) is the seventh-largest diversified, retail-focused NBFC in India with an AUM of ₹1.1 lakh crore as of Jun’25. The company delivered about 20 per cent AUM CAGR over FY22-FY25 and has a wide nationwide footprint, operating more than 1,770 branches across 31 Indian States.
HDB has developed its growth strategy around India’s vast and underserved middle-income segment, which encompasses salaried individuals, self-employed professionals, and small business owners. This focused approach has driven steady expansion of its franchise while minimising concentration risk.
With the benefits of scale now beginning to take effect, we project HDB to deliver a PAT CAGR of approximately 26 per cent over FY25-FY28 and an RoA/RoE of 2.6/16.5 per cent by FY28, supported by a gradual decline in credit costs and higher operating leverage.
We initiate coverage on HDB with a Neutral rating and a TP of ₹860 (premised on 2.7x Sep’27E P/BV). With valuations largely factoring in medium-term growth potential, we would look for clearer evidence of stronger execution on loan growth, ability to better navigate industry/product cycles, and structural (not just cyclical) improvement in its return ratios.
Published on August 25, 2025
