Neutral HDB Financial Services; target of Rs 800: Motilal Oswal

Motilal Oswal's research report on HDB Financial Services

Over the past year, HDB Financial (HDB) has navigated a phase of consolidation, reflected in subdued disbursement momentum, modest AUM growth, and emerging asset-quality pressure across a few of its key product segments. The company management has prioritized stability over scale, reinforcing collections, tightening underwriting frameworks, and retaining a conservative stance toward unsecured lending. This approach has positioned HDB to recalibrate its growth engine with greater resilience as the operating environment normalizes.

Outlook

HDB currently trades at 2.5x FY27E P/BV. We estimate a CAGR of 12%/17%/24% in disbursement/AUM/PAT over FY25-28, with RoA/RoE of ~2.5%/16% in FY28. We reiterate our Neutral rating with a TP of INR800 (premised on 2.5x Sep’27E BVPS).