HDB Financial shares see strong action in listing week. Is it still a stock to buy?
HDB Financial shares' high stands at 891.65 while its low is at ₹ 827.50, which is still at a premium to the issue price.
On the listing day itself, July 2, Emkay Global released an initiation coverage report on the HDFC Bank subsidiary, with a 'Buy' rating and a target price of ₹ 900 per share for June 2026. This signals another 7% upside in HDB Financial share price from current levels.
Vinit Boljinkar, Head of Research at Ventura Securities, also believes the momentum in HDB Financial Services stock could continue to thrive in the long term. He lists three compelling factors that could sustain interest in HDB Financial shares:
1. Market Position: HDBFS is the fourth largest retail-focused NBFC in India, serving a robust retail customer base of 1.9 crore.
2. Strong Loan Growth: The company has demonstrated healthy loan book growth with a two-year CAGR of 23.5%, and with 73% of its loans secured. It has a lower risk profile compared to peers like Bajaj Finance, which stands at 60%. This secured loan base enhances its stability in the long run.
3. Parentage: As a subsidiary of HDFC Bank, HDBFS enjoys strong brand recognition, an extensive distribution network, and low-cost funding, which positions it for continued growth and profitability.
Brokerage Emkay Global also suggests three strong fundamental factors behind its bullish stance, ranging from its diversified operations (geographically and produce-wise); its strategy to focus on direct sourcing (~82% of FY25 disbursements), remote areas (70% branches are in tier 4 towns and beyond), and low-to-mid-income groups; and a favourable interest rate cycle amid frontloaded repo rate cuts, making HDB Financial well positioned to improve profits and growth.
Commenting on the strategy for retail investors regarding HDB Financial shares, Vinit Bolinjkar recommended a 'HOLD' strategy for long-term gains.
Strong retail market position, production diversification and valuation advantage are some of the factors behind his view.
At an FY25 P/B of 3.2x, HDB Financial shares trade at a lower multiple compared to Bajaj Finance (5.85x), offering a potential valuation gap for investors to capitalise on.
From the NBFC space, his top picks remain Bajaj Finance and HDB Financial based on growth potential, low NPAs, and strong backing. However, for risk-averse investors, Cholamandalam and Shriram Finance may be attractive due to their lower valuations, he added.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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