Brokerages raised their target prices on HDB Financial Services after the lender reported a stronger-than-expected June-quarter performance, citing higher margins, improving asset quality and stable credit costs.
Jefferies increased its target price to Rs 845 from Rs 805, Nirmal Bang raised its target to Rs 890 from Rs 870, while Emkay lifted its target to Rs 725 from Rs 675. Morgan Stanley maintained an Equal-weight rating with an unchanged Rs 800 target price, saying the company remains "on the right track".
HDB Financial Q1 Highlights (YoY)
- Net Profit up 38.3% to Rs 785 crore versus Rs 568 crore
- Revenue up 10.6% to Rs 4,938 crore Vs Rs 4,465 crore
- Disbursements for Q1 to Rs 17,629 Crores, up 16.2%
- Asset Quality continues to improve, Gross Stage 3 at 2.34%
- Records highest ever quarterly profit of Rs. 785 Crores, up 38.3%
While brokerages differed on valuation, most said expanding net interest margins and improving asset quality strengthened the lender's earnings outlook.
Here's what brokerages are saying after HDB Financial Q1 Results
Jefferies
- Maintain Buy
- Target price: Raised to Rs 845 from Rs 805
- Q1 PAT beat estimates by about 2%, led by stronger NIM
- AUM growth in line with estimates, driven by consumer finance
- NIM expanded on better lending yields and is expected to remain range-bound
- Asset quality improved despite seasonal pressures
- Credit cost could remain below guidance if current trends continue
- Raised FY27 and FY28 EPS estimates by about 5%
Morgan Stanley
- Maintain Equal-weight
- Target price: Rs 800 (unchanged)
- Q1 was broadly in line with expectations
- Company remains "on the right track"
- Asset quality continues to improve with durable net slippage trends
- Provision coverage remained stable
- Middle East conflict and El Niño-related monsoon risks remain key monitorables for management
Nirmal Bang
- Maintain Buy
- Target price: Raised to Rs 890 from Rs 870
- Q1 earnings beat estimates on total income, PPOP and PAT
- NIM expanded to 8.35%, while asset quality improved
- Cost-to-income ratio declined, supporting profitability
- Consumer finance remained the key growth driver
- Loan growth in asset finance and enterprise lending remained modest
- Introduced FY29 estimates; sees about 18% upside
Emkay
- Maintain Reduce
- Target price: Raised to Rs 725 from Rs 675
- Strong quarter on disbursements, profitability and asset quality
- AUM growth remained soft
- Management expects asset finance growth to improve after portfolio recalibration
- NIM expected to stay above 8%; credit cost seen around 2.3%
- Raised FY27-FY29 earnings estimates by 3%-7%
- Valuation remains the key reason for retaining the 'Reduce' rating
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