Motilal Oswal identifies three significant factors that could potentially lead to a re-rating of HDB Financial Services, emphasizing the need to focus on asset quality, loan growth, and profitability improvement in their business strategy.
HDB Financial Services' profit after tax (PAT) has surged by 17% year-on-year to reach INR 2,544 crore, thanks to improved asset quality and a focus on digital expansion.
HDB Financial Services has confirmed that funds raised through NCDs (Non-Convertible Debentures) in Q1 2026 were utilized as specified in the offer documents, adhering to all RBI guidelines for NBFCs, indicating no deviations or discrepancies in fund management.
HDB Financial Services saw a significant 41.4% increase in profit after tax for Q4, driven by a 21.6% rise in net interest income. Assets Under Management (AUM) also grew by 10.7% year-on-year, while gross Stage 3 loans stood at 2.44%.
HDB Financial has corrected a clerical error in their Q4 and FY26 cash flow statement, leading to an update in their audited financial results. Despite this oversight, the net profit for FY 2026 remains at Rs 25,438M, and a final dividend of Rs 2 per share has been recommended (subject to shareholder approval).
HDB Financial Services has announced a dividend of INR 2 per share, allowing shareholders to receive this amount for each share they hold.
Jefferies is bullish on HDB Financial, predicting a 42% growth in PAT and setting a price target at ₹845. This optimism stems from improved asset quality, NIM expansion, and projected growth in earnings, assets under management, and return on equity. West Asia's impact is expected to be minimal, according to Jefferies.
HDB Financial plans to achieve a low credit cost of roughly 2.3% and maintain a net interest margin (NIM) at approximately 8% over the mid-term, aiming for financial growth.
HDB Financial Services anticipates a significant boost in loan growth, estimated at 6-7%, over the medium term. The early loan disbursements indicate an encouraging pickup in loan growth momentum.
Despite posting an 8% increase in Q4 profits, HDB Financial's stock saw a rise due to robust earnings, yet it still falls short of its initial public offering (IPO) price as per the latest reports by ET Now.
Morgan Stanley maintains a neutral stance towards HDB Financial Services, assigning it an 'Equal Weight' rating. Analysts at Morgan Stanley predict the stock could reach a target price of ₹720.
Nomura maintains a neutral stance on HDB Financial, setting a target price of INR 740, driven by improving asset quality for FY26, surpassed profits, and strong loan growth at 11%. Key factors to consider include reduced operational expenses, improved cost of funds, and potential risks from the West Asia conflict.
On April 15, HDB Financial Services is set to release their Q4 and FY2026 results, with dividend details included. The stock saw a 2.9% increase today, reaching Rs 633, but has experienced a 14.8% drop over the past six months.
HDB Financial Services has made its scheduled interest payments on Non-Convertible Debentures (NCDs) worth ₹110 crores, complying with SEBI regulations, and without any delays in the process.