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Motilal Oswal Report
HDB Financial Services Ltd. reported a healthy quarter, with a meaningful pickup in disbursements, even as the overall loan growth remained muted due to elevated repayments. Asset quality improved sequentially, leading to a moderation in credit costs.
Margins expanded ~15 basis points QoQ, supported by a decline in cost of funds.
HDB Financial currently trades at 2.3x FY27E price/book-value.
Motilal Oswal estimates a CAGR of 14%/16%/20% in disbursement/assets under management/net profit over FY26-28, with RoA/RoE of ~2.5%/14.3% in FY28E.
The brokerage reiterates Neutral with a target price of Rs 720 (premised on 2.2x Mar'28E book value per share).
With valuations largely factoring in medium-term growth potential, Motilal Oswall looks for clearer evidence of stronger execution on loan growth, the ability to better navigate industry/product cycles, and structural (not just cyclical) improvement in return ratios.
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