Neutral HDB Financial Services; target of Rs 860: Motilal Oswal

Motilal Oswal's research report on HDB Financial Services

HDB Financial Services (HDB) is the seventh-largest diversified, retail-focused NBFC in India with an AUM of ~INR1.1t as of Jun’25. The company delivered a ~20% 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, selfemployed professionals, and small business owners. This focused approach has driven steady expansion of its franchise while minimizing concentration risk.

Outlook

With the benefits of scale now beginning to kick in, we project HDB to deliver a PAT CAGR of ~26% over FY25-FY28 and an RoA/RoE of 2.6%/16.5% 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 INR860 (premised on 2.7x Sep’27E P/BV).