NBFC Stock Receives ‘Buy’ Rating from ICICI Securities with 40% Upside Potential

Synopsis: A brokerage has maintained a ‘Buy’ rating with a ₹900 target, implying about 36% upside from ₹642. The NBFC has built a ₹1 trillion+ asset franchise, delivered 20% AUM CAGR over a decade, and reported ₹17,917 crore Q3 disbursements, while its loan book stands at ₹1,14,577 crore.

India’s NBFC sector fuels credit to underserved segments like retail, MSMEs, and vehicles, bypassing traditional banking hurdles. In FY26, it eyes 15-17% AUM growth, hitting ₹48-50 lakh crore by March amid RBI rate cuts boosting demand. H1FY26 saw 17% credit surge, outpacing banks, with retail at 56% of AUM.

With a market capitalisation of Rs 53,300 crore, the shares of HDB Financial Services Ltd were trading at Rs 642 per share, falling around 0.04 per cent as compared to the previous closing price of Rs 642.25 apiece.

Brokerage Recommendation

ICICI Securities Limited has maintained a ‘Buy’ rating on a financial services stock with a target price of ₹900 per share. Based on the current price of ₹642, this suggests a potential upside of about 40%, indicating the brokerage’s positive outlook on the company’s growth prospects and improving financial performance.

Rational

As per the brokerage, HDB Financial Services has built a strong asset franchise exceeding ₹1 trillion, supported by disciplined execution and diversification. Backed by its parent ecosystem, the company has expanded across multiple geographies and products, maintaining balanced exposure where no single state contributes more than 15% of total assets.

Over the past decade, the company has delivered around 20% AUM CAGR between FY15 and FY25, driven by a structured underwriting framework and focus on low-to-middle income segments in smaller towns. Although growth moderated to about 7% in 9MFY26, improving trends in unsecured business loans and a commercial vehicle cycle recovery could accelerate expansion.

The brokerage also noted that the company’s strategy has helped maintain an average RoE of nearly 15% over the last decade. While RoE slipped to around 13% in December 2025 due to higher credit costs, improving asset quality is expected to reduce credit costs to about 2.2%, potentially supporting RoE recovery toward 16%.

The company reported strong disbursement momentum in Q3, reaching an all-time high of ₹17,917 crore, reflecting a 15% quarter-on-quarter growth driven mainly by consumer finance. However, overall loan book expansion remained modest, rising 2.8% sequentially to ₹1,14,577 crore. Management attributed the gap to selective lending, higher prepayments, and recoveries that temporarily limited net loan book growth.

HDB Financial Services Limited is a leading NBFC in India and a subsidiary of HDFC Bank Limited. The company provides a wide range of secured and unsecured loans to retail and small business customers, focusing on underserved segments across urban and semi-urban markets through its extensive branch network.

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.

The post NBFC Stock Receives ‘Buy’ Rating from ICICI Securities with 40% Upside Potential appeared first on Trade Brains.