HDB Financial share price: 22% upside? HDFC Bank arm gets 'Long' rating ahead Q4 results on April 15

Ahead of its March quarter results on Wednesday, Equirus Securities has initiated coverage on HDB Financial Services Ltd with a 'Long' rating and 22 per cent upside target, saying the HDFC Bank subsidiary is a retail powerhouse built on granularity and diversification. While domestic trends are stabilising with early signs of credit growth revival and easing credit costs, elevated crude prices from the West Asia conflict remain a key risk.

"Sustained spikes could strain borrower cash flows, lift credit costs, and moderate growth, with the conflict trajectory a key swing factor," Equirus said. 

The domestic brokerage said Enterprise Lending, Asset Finance, and Consumer Finance together form the core of HDB Financial's diversified lending franchise. The company has built a large customer base, with AUM growing at 15 per cent CAGR over FY22-9MFY26 to Rs 1,14,600 rcore. As of December 2025, the loan book remained largely secured, with 74 per cent secured and 26 per cent unsecured exposure, Equirus said noting that the customer base is predominantly underbanked, comprising low- to middle-income households with limited or no credit history.

In its base case, Equirus build in an AUM CAGR of 18 per cent over FY26-FY28 with pre-provision operating profit (PoP) and PAT CAGR of 20.6 per cent and 27.4 per cent, respectively for FY28. It suggested return on average equity (ROAE) at 16 per cent for FY28.

The brokerage Initiated coverage on HDB Financial with 'LONG' with March 2027 target of Rs 761, valuing the company at 2.5 times FY28 ABVP. The NBFC's board will report its audited standalone financial results for the quarter ended March 31, 2026 on Wednesday. It would also recommend final dividend, if any, and approve borrowing of funds by issue of non-convertible securities on private placement basis, in one or more tranches, the same day.

"HDBFS’s customer franchise has scaled meaningfully while retaining a consistently small-ticket profile.
The customer base reached 2.2 crore as of 3QFY26, up 14.6 per cent YTD, maintaining a multi-year trend of double-digit expansion. The loan book remains firmly small ticket, with the average ticket size stable at Rs 1.64 lakh across FY23-9MFY26. This reflects a diversified mix of individual retail and small enterprise borrowers, aligned with the company’s focus on ‘Aspirational India’ and underserved segments," Equirus said.

HDFC Bank is the promoter and held 74.2 per cent of HDB Financial Services' fully diluted paid-up capital as of December 2025. This ownership structure, said Equirus Securities, ensures close alignment in governance, risk frameworks, and business priorities, providing HDBFS access to the parent’s credibility, oversight, and long-term direction. 

"The parentage positions HDBFS as a core retail- and MSME-focused NBFC within the group. The operational linkage between the two entities is longstanding. HDBFS provides BPO support, sales assistance, back-office processing, and large-scale collections management to HDFC Bank. It handles end-to-end retail collections across 700 locations through ~18 call centres with 5,500 seats. These functions constitute a meaningful business segment, generate steady fee income, and deepen integration with HDFC Bank’s retail lending ecosystem," Equirus said.