HDB Financial Services Ltd. share price target

We initiate coverage on HDB Financial Services (HDBFS) with BUY and Jun-26E TP of Rs 900 (+22% upside), on FY27E P/B of 3.0x. Our positive view is due to, HDBFS being a highly diversified (geographically and product-wise), extremely granular (top 20 accounts constitute ~0.34% of AUM), and large-scale lending franchise with over 19mn customers.

HDB Financial Services Ltd (HDBFS) is a subsidiary of HDFC Bank Ltd. It is a non-banking financial corporation, provides a range of financial services in India. The company offers secured loans against long and short term investments, equities, bonds, ESOPs, commercial vehicles, property, gold, and jewellery; and unsecured loans, including business and personal loans. It also provides general insurance products, such as motor, health, critical illness, travel, home, and personal accident...

IPO NOTE

HDB Financial Services is one of the leading diversified retail-focused NBFC with an AUM of Rs.1,073bn as of FY25. With a strong parentage of HDFC Bank, the non-bank lender primarily offers loans under 3 main verticals--Enterprise lending, Asset Finance and Consumer Finance. The company had 1,771 branches as of FY25, with over 80% of the branches outside India's 20 largest cities and over 70% are located in tier 4+ towns. Secured loans formed ~73% of the total gross loan portfolio of the company. The company primarily caters to underserved and underbanked customers in low to middle-income households...

Company is the seventh largest leading, diversified retail-focused non-banking financial company (NBFC) in India in terms of the size of Total Gross Loan book at 902.2 billion as at March 31, 2024, amongst its NBFC peers. Company is categorized as an Upper Layer NBFC (NBFC-UL) by the RBI. It offer a large portfolio of lending products that cater to a growing and diverse customer base through a wide omni-channel distribution network. Company's lending products are offered through its...