HDB Financial shares: After visiting Varanasi, broker gave 31% upside target; here's why

ICICI Securities in its latest note on HDB Financial Services Ltd suggested 31 per cent upside potential for the stock. The brokerage maintained its target price of Rs 900 on the NBFC with a 'Buy' rating after visiting HDB Financial's credit branches in Varanasi, Uttar Pradesh (UP), which accounts for 14 per cent of its total assets under management (AUM) as of June 30.

The domestic brokerage noted that HDFC Bank's UP portfolio grew 16 per cent YoY in the June quarter compared with 12 per cent YoY growth in its overall portfolio during the same period.

The company offers the entire breadth of its product suite in UP, with HDB Financial Services  being one of the market leaders across segments such as commercial vehicle and unsecured business and personal loans.

"Its CV portfolio in UP is growing at 16 per cent YoY as compared to overall CV growth of 10 per cent YoY. Key focus area remains IHCV, with 60 active dealer relationships," ICICI Securities said adding that HDB Financial maintained a distinct competitive edge in the state through its highly execution focused internal teams, deeply seasoned on-ground personnel and an extensive branch network that ensures strong proximity to local customers.

The broking firm said collection trends for HDB Financial have remained robust in recent months despite successive fuel price hikes, as retail customers are less vulnerable to these fluctuations and HDBFS mainly focuses on retail customers.

HDB Financial's customer base primarily consists of first-time-users (39 per cent) and fleet operators owning only 1–2 vehicles (35 per cent), which has helped sustain strong asset quality.

ICICI Securities said the management has highlighted the resilient business momentum since April 2026, despite the West-Asia conflict.

"While our Varanasi visit reinforces our confidence in HDBFS UP franchise, the broader business also shows improving momentum. Credit demand remains healthy, unsecured BL/PL is showing early signs of recovery, and the company continues to benefit from its strong CV franchise and diversified product suite. With asset quality trends stabilising and growth visibility improving, we remain positive on the name," the domestic brokerage said.