The HDB Financial Services share price has surged nearly 8% intraday today, holding on to most of the sharp gains seen after the company reported its March quarter results. The stock had already gained 5.16% in the previous session ahead of the earnings. The rally after the Q4 numbers indicate sustained buying interest even after the announcement. Key brokerage houses see room for 10% plus upside for the share price.
HDB Financial Services Q4: Strong show
The rally followed a strong Q4FY26 performance, where the company reported net profit of Rs 751 crore for the March quarter, up 41.4% from Rs 531 crore in the corresponding period last year. Interest income rose to Rs 4,081 crore in Q4FY26 from Rs 3,623 crore in Q4FY25, marking a 13% increase.
On the balance sheet side, asset under management (AUM) increased to Rs 1,18,733 crore as of March 31, 2026 from Rs 1,07,262 crore as of March 31, 2025, reflecting a growth of 10.7% over one year. The gross loan book rose to Rs 1,18,493 crore as of March 31, 2026 from Rs 1,06,878 crore as of March 31, 2025, up 10.9%. Provision coverage on stage 3 assets stood at 55.53% as of March 31, 2026 compared with 55.95% a year earlier.
The board recommended a final dividend of Rs 2 per equity share and approved borrowing up to Rs 32,825 crore through debt securities in one or more tranches. Management stated that there has been no material impact from geopolitical tensions so far, including within the MSME segment, while adding that it continues to monitor the situation closely.
HDB Financial Services: Q4 profit growth supported by margins
The March quarter performance was driven by improvement in profitability metrics, supported by margin expansion and better cost control, along with easing credit costs. Net interest income remained strong, while operating expenses came in lower than expectations, helping boost earnings.
JM Financial said the company delivered a strong quarter with improved profitability and operating performance, stating, “HDB continues its cyclical recovery, reporting a robust quarter, driven by lower-than-expected opex and improved asset quality metrics. PAT rose 41% year-on-year and 17% quarter-on-quarter, propelling RoA and RoE to 2.5% and 14.8%, marking the highest levels in the last six quarters.”
Margins expanded sequentially during the quarter as cost of funds declined, supporting net interest margins. Credit costs also moderated, contributing to the overall improvement in profitability.
Motilal Oswal noted that earnings growth was supported by stable operating performance and margin expansion, stating, “HDB Financial’s Q4FY26 PAT rose 41% year-on-year and 17% quarter-on-quarter to Rs 750 crore. Net interest income in Q4FY26 grew 22% year-on-year to around Rs 2,400 crore, while cost to income in the lending business remained stable quarter-on-quarter.”
HDB Financial Services: Q4 disbursement growth improves
Operationally, the company saw a meaningful improvement in disbursements during the quarter, driven by consumer finance and enterprise lending. However, this did not fully translate into loan book expansion due to higher repayments.
JM Financial said that growth in assets under management remained relatively muted despite stronger disbursement activity, noting, “AUM growth remained subdued at 11% year-on-year, influenced by higher repayments and a lag effect.”
Motilal Oswal also pointed to the gap between disbursement growth and loan growth, stating, “HDB Financial reported a healthy quarter, with a meaningful pickup in disbursements, even as the overall loan growth remained muted due to elevated repayments. While the business trajectory is improving, the pace of recovery in loan growth continues to be gradual.”
This remains a key factor to watch, as sustained loan growth will be necessary for the next phase of earnings expansion.
HDB Financial Services: Asset quality improves in Q4 as stress eases across segments
Asset quality trends improved during the quarter, with lower slippages and better recovery trends contributing to a decline in non-performing assets and credit costs.
JM Financial highlighted the improvement in asset quality metrics, stating, “GS3 and NS3 improved to 2.4% and 1.1%, down by 36 basis points and 16 basis points quarter-on-quarter, respectively. Management emphasized that the challenges faced in segments like LAP and MSME are fully behind.”
Motilal Oswal also pointed out that asset quality strengthened sequentially, noting, “Asset quality improved with GNPA declining around 40 basis points quarter-on-quarter to around 2.45%, while NS3 declined around 15 basis points quarter-on-quarter to around 1.1%. Credit costs stood at around Rs 680 crore.”
The steady improvement in asset quality has supported profitability and provides comfort on future credit costs.
HDB Financial Services: Brokerage view after Q4 results
JM Financial view on HDB Financial
JM Financial has maintained an ‘Add’ rating with a target price of Rs 710, implying an upside of about 10.2% from current levels. The brokerage expects the company to deliver around 15% AUM growth and maintain return on equity near 15% over the medium term, supported by improving asset quality and better disbursement trends. It also noted that earnings estimates have been revised upward following the strong quarterly performance. The brokerage said, “We have revised our FY27-28E EPS estimates upwards and value the company at 2.1x FY28E BVPS in return for around 15% AUM CAGR and around 15% RoE over FY26-28E. We maintain our ADD rating with a revised target price of Rs 710.”
Motilal Oswal on HDB Financial
Motilal Oswal has reiterated a ‘Neutral’ rating with a target price of Rs 720, indicating an upside of about 12% from its base valuation. The brokerage acknowledged the improvement in margins, asset quality and profitability, but noted that loan growth recovery remains gradual and valuations are not inexpensive at current levels. It expects steady growth across disbursements, loans and earnings over the next two years, while remaining watchful of execution on loan growth. The brokerage said, “HDBFIN currently trades at 2.3x FY27E P/BV. With valuations largely factoring in medium-term growth potential, we will look for clearer evidence of stronger execution on loan growth before turning constructive on the stock.”
Conclusion
HDB Financial Services has reported a strong March quarter with improvement in profitability, margins and asset quality, which has driven a sharp move in the stock. Even after the initial surge, the stock continues to hold gains near Rs 695, indicating that the market has responded positively to the earnings.
At the same time, with the stock trading close to brokerage target prices, further upside will depend on how quickly disbursement momentum translates into stronger loan growth and whether margins remain stable. The next few quarters will be important in determining whether the current recovery sustains and supports additional upside.
Disclaimer: The analysis of financial instruments, target prices, and specific “buy/sell” implications in this report is for informational purposes only and does not constitute a formal offer or solicitation. Stock market investments are subject to market risks; please consult a SEBI-registered investment advisor before making any decision based on the brokerage ratings or price targets mentioned. Historical performance and earnings growth are not indicative of future results.
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