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Investing.com - Jefferies initiated coverage on HDB Financial Services (HDBFS:IN) with a Buy rating and a price target of INR900.00 on Monday.
The investment firm views HDB, a subsidiary of HDFC Bank, as having established a competitive advantage through its diversified portfolio, deep distribution network, large customer base, and competitive funding costs.
Jefferies projects HDB can deliver 18% AUM CAGR and 22% EPS CAGR over FY25-28e, with ROE improving to 16% by FY28e from 13% in FY26e following a capital raise, despite potentially subdued metrics in FY26.
The stock is currently trading near its IPO price, down approximately 10% from its post-listing peak, at 2.9x FY1 book value and 23x FY1 PE, which represents a discount to peers like CIFC and BAF that have higher ROE.
Jefferies identifies key risks including slower growth, higher asset quality stress, and potential regulatory changes to bank subsidiary holding norms.
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