Jefferies has maintained its 'buy' rating on HDB Financial Services Ltd. while trimming the target price to Rs 900 from Rs 920, citing near-term growth headwinds but a gradual improvement outlook. The current market price of HDB Financial Services Ltd. is Rs 645.
The brokerage said demand has remained good in Q4 so far, and assets under management (AUM) growth is expected to stabilise in 2H before gaining momentum from FY27 onwards. Jefferies estimates AUM growth could improve to 16–18% in FY27e.
Net interest margins (NIMs) are expected to remain steady in the near term, despite a marginal inch-up in cost of funds. Over the medium term, NIMs should expand, aided by easing interest rates and changes in loan mix.
On asset quality, Jefferies noted that collections have improved, and asset quality pressure is likely to stabilise in the second half and improve in FY27.
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The brokerage in its note said that credit costs are expected to dip to around 2.4% in the near term and ease further thereafter. Management expects return on assets (ROA) to improve to 2.5% by FY28. While earnings growth may remain modest in FY26, Jefferies expects a healthy recovery in earnings and returns during FY26–28, supporting valuation multiples.
Following the recent pullback, valuations appear reasonable, with growth pickup and credit cost moderation seen as key triggers for re-rating.
Out of 14 analysts tracking the company, seven maintain a 'buy' rating while six maintain a "hold" and one maintains a "sell" rating, according to Bloomberg data. The average 12-month consensus price target of Rs 830.43 implies an upside of 28.8%.
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