The stock is trading at Rs 762.35 on Wednesday, down about 10.3% from its listing-day peak of Rs 849.85 on the National Stock Exchange and nearly 14.5% below its all-time high of Rs 891.65 hit on July 3, 2025.
HDB Financial listed on July 2 after its Rs 12,500 crore initial public offering, priced at Rs 740 per share. Despite the correction, the stock has risen nearly 3% over the past one month.
Jefferies said the stock’s decline from its post-listing highs has created room for upside, noting that HDB Financial is “down 10% vs. post listing peak and is trading at 2.7x FY27 BV (20x FY27 PE). We maintain Buy with PT of Rs 900 based on 2.8x Dec 27e BV.”
Growth improving, sustainability key
Jefferies said it recently hosted HDB Financial’s Chief Executive Officer, Ramesh Ganesan, for a US roadshow, where management indicated that growth has improved following goods and services tax cuts, though it remains “early to conclude around sustainability.”
Management expects assets under management to grow at a compounded annual rate of 18–20% over the next three years, with net interest margins likely to remain range-bound, the report said.
According to the brokerage, disbursements were strong in October and “held up well in Nov,” with volume growth offsetting price deflation in segments such as two-wheelers, cars and consumer durables. In commercial vehicles, original equipment manufacturers initially withdrew discounts, but these were later restored, resulting in 6–7% price deflation. While the overall momentum is encouraging, Jefferies noted that “sustainability has to be seen per mgmt.”
Credit costs seen peaking
On asset quality, Jefferies said stress in unsecured business loans seen last year has stabilised, while stress in commercial vehicles drove the rise in gross non-performing assets and credit costs in the first half of FY26. Management told investors that credit costs peaked at 2.7% in the September quarter and are expected to moderate to about 2–2.2% in the medium term.
“In CVs, it has stopped lending to first-time truck operators (higher stress); collections are better and forward flows have moderated,” the brokerage said, adding that filters introduced in unsecured business loans have lowered approval rates but improved bounce rates and early delinquencies.
Returns to improve over medium term
Jefferies expects moderation in credit costs and operating leverage to lift profitability over the next few years. The brokerage said HDB Financial is targeting a return on assets of about 2.5% and a return on equity of 16–17% over the next two to three years, compared with 1.9% and 12.2%, respectively, in the September quarter.
“We expect sequential trends to improve and see EPS growing at 29% CAGR over FY26–28e,” Jefferies said, adding that it sees return on equity improving to about 16% by FY28.
For investors who chased the stock on debut, HDB Financial’s slide from its early highs has tested patience. For Jefferies, however, the retreat from the peak is precisely what makes the risk-reward compelling at current levels.
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