Introduction: A Promising Debut for HDB Financial Services
HDB Financial Services has made a grand entrance
into the Indian stock markets. Backed by the strong legacy of HDFC Bank, the
non-banking financial company (NBFC) got its first major thumbs-up from the
investing community. Brokerage firm Emkay Global Financial Services has
initiated coverage with a ‘Buy’ rating, predicting a potential 22% upside from its initial public
offering (IPO) price.
But what makes HDB Financial so attractive to analysts? Why is there growing investor interest in this company? Let’s break it down in simple terms.
Strong Backing from HDFC Bank
One of the biggest strengths of HDB Financial
Services is its parent company—HDFC Bank,
one of India’s most trusted and valuable banks. According to Emkay Global, this
strong backing gives HDB the perfect combination of:
·
Best
pricing power
·
Large
funding capabilities (thanks to AAA credit rating)
·
Widespread
brand recognition
These factors together make HDB Financial well-positioned to become a significant player in India’s lending sector, especially at a time when credit demand is rising in both urban and rural India.
Impressive Stock Market Listing
HDB Financial listed on July 2, 2025, at a 13% premium to its issue price of ₹740
per share. The stock debuted at ₹835 on both the BSE and NSE and quickly
climbed to highs of ₹845.75 (BSE) and ₹849.85 (NSE).
Such a strong listing not only signals investor confidence but also lays a positive foundation for future performance.
Emkay Global's Bullish Outlook
In its recent note, Emkay Global said that HDB
Financial Services has all the right ingredients to scale up quickly in India’s
financial ecosystem. Here are the key highlights of the report:
·
Target
Price: ₹900 per share (22% upside from IPO price)
·
Valuation:
3x FY27E Price-to-Book (P/B)
·
Growth
Forecasts:
o 20% CAGR in AUM
o 2.7% Return on Assets (RoA)
o 17% Return on Equity (RoE)
According to Emkay, the company's stable top leadership, broad customer base, and direct origination and collection model make it well-suited to serve underbanked and unbanked populations, often referred to as Enterprise Bharat.
HDB by the Numbers
Here are some important statistics about HDB Financial Services that highlight its scale and potential:
| Metric | Value |
|---|---|
| Customers Served | Over 19 million |
| Branch Network | 1,770 branches across India |
| Assets Under Management (AUM) | ₹1.1 trillion |
| Listing Price | ₹835 per share |
| Peak Listing Day Price (NSE) | ₹849.85 per share |
| Target Price by Emkay Global | ₹900 per share |
AUM and Profitability Trends
HDB has shown steady growth in both AUM and profits over the years.
Between FY23 to FY25:
·
AUM grew
at 23.7% CAGR
·
Pre-provisioning
operating profit (PPoP) grew at 12.9% CAGR
While these figures are slightly below the
peer average of 25.3% AUM growth and 19.4% PPoP growth, analysts believe the
gap will narrow soon.
The company is expected to benefit from stronger consumer demand, especially in
Tier 2 and Tier 3 cities. This demand is being supported by:
·
Government efforts to cut income tax
·
RBI’s control
on inflation
· Possible reductions in GST rates
HDB's Strengths That Attract Long-Term
Investors
Here are a few reasons why HDB Financial is
catching the eye of long-term investors:
Strong
Parentage
Being part of the HDFC Bank family brings
trust, systems, and access to low-cost capital.
Deep Rural
& Urban Reach
With its 1,770 branches, HDB can tap into
credit needs across urban and rural India.
Direct
Origination & Collection Model
Although this model increases operational
expenses (opex), it ensures better loan recovery and customer
relationships—ultimately supporting higher net yields.
Focus on
Overlooked Segments
HDB focuses on micro-entrepreneurs, small businesses, and low-income consumers—a
large and underserved market.
Lower Cost
of Borrowing
Thanks to its AAA credit rating, the company can raise funds at cheaper rates, improving net interest margins (NIM).
Long-Term Growth Potential
According to projections by Emkay Global:
·
HDB's AUM could grow to ₹1.8 trillion by FY28
·
Its Return
on Assets (RoA) and Return on
Equity (RoE) are expected to improve steadily
· Continued focus on overlooked and underserved markets will help the company grow organically, without relying on acquisitions
Valuation Compared to Peers
Another key point raised by analysts is HDB’s attractive valuation. At the time of the
IPO, HDB was priced at:
·
3.4x TTM
P/B (Trailing Twelve Months Price to Book)
·
In comparison, the peer average was 4.4x TTM P/B
This means investors were getting HDB at a discount, despite its strong parentage and long-term potential. Some analysts even compared HDB’s opportunity to that of Bajaj Finance in its early days, suggesting that HDB has a long way to grow.
What Other Analysts Are Saying
Apart from Emkay Global, other brokerages have
also expressed confidence in HDB Financial:
·
Deven
Choksey Research believes that rural and urban demand will drive loan
disbursements in FY26 and beyond
·
Mirae
Asset Sharekhan highlights the favourable
macro environment and HDB’s smaller
size compared to competitors, which offers a longer growth runway
In short, market experts agree: HDB Financial is in a sweet spot—it has the scale, backing, and strategy to grow.
Final Thoughts: Should You Buy HDB Financial
Shares?
If you are a long-term investor, HDB Financial Services might be
worth considering. While short-term fluctuations are always possible, the
company’s fundamentals are strong, and its market opportunity is large. Backed
by HDFC Bank, managed by experienced leadership, and armed with an efficient
lending strategy, HDB is likely to remain a solid bet in the NBFC space.
With the first 'Buy' call from Emkay and the stock already trading at a premium, momentum seems to be on HDB’s side.
