“HDB Financial Nabs First ‘Buy’ Call—Emkay Predicts 22% Upside!”

July 2, 2025: HDB Financial Services, the non-banking financial subsidiary of HDFC Bank, made a strong debut on the stock exchanges, listing at a 13% premium over its issue price. Shares opened at ₹835 on both BSE and NSE against the issue price of ₹740, and later climbed to intraday highs of ₹845.75 (BSE) and ₹849.85 (NSE).

Brokerage firm Emkay Global Financial Services initiated coverage on HDB Financial with a ‘Buy’ rating, projecting a potential 22% upside from the issue price and setting a one-year target price of ₹900. Analysts highlighted HDFC Bank’s strong parentage, HDB’s stable top management, and its strategic focus on lending to India’s underbanked segments as key positives.

“HDB’s stable leadership has enabled it to emerge as a significant lender to ‘Bharat’, serving over 19 million customers through 1,770 branches with assets under management (AUM) exceeding ₹1.1 trillion,” Emkay Global said in a note.

Emkay forecasts a 20% AUM compound annual growth rate (CAGR), 2.7% return on assets (RoA), and 17% return on equity (RoE) — metrics expected to drive a gradual stock re-rating. The brokerage values HDB shares at 3x FY27E price-to-book (P/B).

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According to Emkay, HDB’s wide reach, origination strength, and improved capital adequacy post-IPO position it to benefit from an expected surge in credit demand, especially if the Reserve Bank of India pursues frontloaded repo rate cuts. HDB’s direct origination and collection model, while resulting in higher operating expenses, supports relatively higher net yields, Emkay noted.

Prashanth Tapse, Senior VP (Research) at Mehta Equities, recommended investors hold the stock from a long-term perspective, citing strong growth prospects and credible management.

Deven Choksey Research, in a pre-IPO note, also highlighted HDB’s attractive pricing at 3.4x TTM P/B compared to the peer average of 4.4x, and expected higher AUM and disbursement growth driven by rising urban and rural demand, supportive government policies, and potential GST and income tax cuts.

Mirae Asset Sharekhan analysts added that HDB’s relatively smaller size compared to peers like Bajaj Finance, coupled with strong parentage, offers a long growth runway. They believe a favourable macroeconomic environment will further bolster the company’s prospects, making it a strong medium- to long-term investment opportunity.