Diversified retail NBFC with proven execution track-record; proxy to India’s growth story
HDB Financial Services (HDBFS) – a blue-chip heritage paired with a formidable low-cost borrowing moat. The combination bestows an inherent advantage upon the company to command sustainable, scalable and high-margin growth. Notably, HDBFS has been strategically firming up an asset franchise stronghold (>INR 1trn, as of FY25) in India’s underserved hinterlands (~70% branches in tier-4+ locations). Separately, despite macroeconomic headwinds, it delivered a >20% AUM CAGR (FY14–25), bolstering its leading NBFC status. A decadal ~2% credit cost average is testament to HDBFS’ cycle-tested underwriting and risk-management protocols. HDBFS’ focus on direct customer sourcing – accounts for >80% of FY25 disbursements – facilitates customer quality and operational efficiency. These vantages should help HDBFS deliver ~18%/~25% AUM/PAT CAGRs over FY26–28E. We initiate coverage at BUY and a TP of INR 900, basis 3x Sep’27E BVPS.
