HDB Financial Services Surges 12% on Stellar Q4 Results; Brokerages Adjust Targets Amid Rs 32,825 Cr Raise

Shares of HDB Financial Services surged over 12% on Thursday, propelled by the announcement of robust financial results for the fourth quarter of FY26. The leading non-banking financial company (NBFC) garnered significant bullish attention from international brokerages following the Q4 earnings release, which beat market estimates.

The company reported a significant 41% surge in its net profit, reaching Rs 751 crore in Q4 FY26. This figure marks a substantial jump compared to the Rs 531 crore reported in the same quarter of the previous financial year. Furthermore, the subsidiary of HDFC Bank recorded a 22% year-on-year (YoY) rise in its net interest income (NII) during the quarter.

The company also formalized its commitment to stakeholders by announcing a final dividend of Rs 2 per share for FY26. To support its growth trajectory, the board approved the fundraising of Rs 32,825 crore through the issuance of debt securities across multiple tranches.

Q4 Financial Performance and Operational Highlights​

HDB Financial Services demonstrated strength across key operational metrics. The strong profit growth was underlined by improved asset quality and stable margins. For instance, the 22% YoY growth in NII was attributed to spreads improvement, while asset quality improved sharply due to lower slippages and stronger provision coverage.

Management also provided key insights, noting that the sequential decline in yields during the quarter was driven by changes in product mix, with expected yield improvements tied to growth in unsecured segments. The company also reiterated that it aims to grow its loan book at approximately 6-7% above the nominal GDP.

Brokerage Calls React to Strong Earnings Beat​

Following the strong Q4 results for the January-March quarter of FY26, several brokerages issued varying yet largely constructive calls on HDB Financial Services. Experts highlighted that the profitability was driven by both strong profit growth and the improvement in asset quality metrics.

Jefferies noted that while Assets Under Management (AUM) growth slowed to 11%, disbursement growth picked up, and Net Interest Margins (NIMs) showed positive surprises. The international brokerage maintained a 'Buy' call but cut its target price to Rs 845 apiece from Rs 900 apiece. This new target implies an upside potential of more than 31% from the previous closing price of Rs 644.30 apiece.

Morgan Stanley maintained an 'Equal weight' rating with a target price of Rs 720 apiece, citing the strong profit growth and stable margins. The brokerage emphasized that the improvements in credit costs and the overall normalization trend in stressed assets signal a durable recovery.

Varying Targets: Analysts Assess Future Growth Vectors​

Analysis on the stock showed diverse views regarding the path forward. Emkay Global, while acknowledging the Q4 profitability, highlighted the soft AUM growth, leading them to maintain a 'Reduce' call with an unchanged target price of Rs 625 apiece. They noted that the West Asia conflict remains a key monitorable risk.

Conversely, JM Financial revised its FY27-28E EPS estimates upwards by 3% and maintained an 'Add' rating, hiking its target price to Rs 710 apiece. This was based on the view that HDB is at a cyclical recovery inflection point, bolstered by improved asset quality and pickup in disbursements.

Other institutions offered their perspectives, with Motilal Oswal Financial Services maintaining a 'Neutral' rating but raising its target price to Rs 720 apiece. The general consensus among experts pointed to improving asset quality and moderating credit costs as key positive indicators for the sector.