HDB Financial Services rises after brokerage upgrades stock to 'overweight'

HDB Financial Services rose 2.43% to Rs 697.65 after a foreign brokerage upgraded the stock to 'overweight' and raised its price target to Rs 850 per share.

The revised target implies an upside of around 25% from Wednesday's closing price of Rs 681.10. The brokerage said the company's asset quality has improved, with the June quarter marking a meaningful improvement despite being seasonally weak.

The brokerage also said the recent correction in the stock has made its valuation attractive and offers significant upside. It expects HDB Financial Services' return on equity (ROE) to increase to 16.8% by FY29 from 14% in FY26.

The brokerage expects earnings per share (EPS) to grow at a compound annual growth rate (CAGR) of 26% between FY26 and FY29, compared with flat growth during FY24-FY26. It said the stock's FY28 price-to-book value of 2 times and price-to-earnings multiple of 13 times appear attractive relative to its fundamentals.

HDB Financial Services reported its highest-ever quarterly profit after tax of Rs 785 crore in Q1 FY27, up 38.3% from Rs 568 crore in Q1 FY26. Net interest income rose 19.9% YoY to Rs 2,509 crore, while net total income increased 16.8% YoY to Rs 3,185 crore.

Pre-provisioning operating profit rose 25% YoY to Rs 1,752 crore in Q1 FY27 from Rs 1,402 crore in the year-ago quarter.

HDB Financial Services is a non-deposit-taking NBFC and a subsidiary of HDFC Bank, established in 2007 and classified as an upper-layer NBFC by the RBI. It offers loans to individuals, emerging businesses and micro enterprises through three segments - enterprise lending, asset finance and consumer finance. As of 30 June 2026, the company had 1,710 branches across 1,165 cities and towns.

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