HDB Financial is India's second largest and third fastest-growing customer franchise among its NBFC peers. Most analysts and experts believe that compared to peers, non-bank HDB Financial Services’s maiden issue is reasonably valued, considering its growth and return ratio profile.
At the price band of Rs 700 to Rs 740, the company is valued at an FY25 price-to-book ratio of ~3.2x/~3.4x at post-issue capital at the lower price band & upper price band respectively, which is reasonable as compared to its peers considering the growth and return ratio profile.
Even at the upper price band - Rs 740 per share, HDFC Bank’s subsidiary valued below Bajaj Finance and Cholamandalam Investment and Finance. However, analysts believe this is reasonable, as it doesn’t give investors the same return on equity (RoE).
As of FY25, Bajaj Finance’s RoE was 19.4 percent, while Cholamandalam Finance gave an RoE of 19.7 percent. In comparison, HDB Financial Services had an RoE of 14.7 percent for the fiscal year.
Further, HDB Financial Services, with an AUM of Rs 1.07 lakh crore as of March 2025, is a mid-sized player, when compared to the top NBFCs. While it trails Bajaj Finance and Shriram Finance in absolute size, it has posted a robust AUM CAGR of 23.7 percent.
This is still behind Bajaj Finance and Chola Finance, which have demonstrated stronger growth momentum at 29.9 percent and 31.6 percent respectively.
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On profitability metrics, HDB's net interest margin (NIM) of 7.6 percent places it in the mid-tier. It is higher than Sundaram Finance (5.2 percent) and Chola (6.6 percent), but lower than Mahindra Finance (7.3 percent), Shriram Finance (9 percent), and especially Bajaj Finance, which leads the pack at 12 percent.
The Return on Assets also is in the middle of the pack at 2.2 percent. It is lower than Sundaram Finance (2.8 percent), Chola (2.4 percent), and significantly behind Bajaj Finance’s industry-leading 5 percent RoA. However, it is stronger than Mahindra Finance's 1.9 percent.
In terms of asset quality, HDB Financial has a net NPA ratio of 0.6 percent, matching Sundaram Finance and ahead of Mahindra Finance (1.3 percent), Shriram Finance (1.6 percent), and Chola (1 percent). However, Bajaj Finance leads here too, with the lowest net NPA at 0.3 percent.
“Strong parentage and much smaller in size as compared to its core peer, Bajaj Finance, provides a long runway for growth. Additionally, a favourable macro environment will act as a tailwind for the sector in the near to medium term. We expect healthy listing gains and remain assertive from a medium to long-term perspective,” said Mirae Asset Sharekhan.
Further, analysts said that continued Investment in digitalisation and AI can reduce opex as the company has higher cost to income with its core peers. HDB Financial has a cost to income ratio at 42.8 percent, while Bajaj Finance’s was 34.2 percent for FY25.
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