Jefferies sees 40% upside in HDB Financial shares despite post-listing slide

Shares of edged higher in early trade on Wednesday, even as the stock continued to hover well below its listing price. The counter rose 2 per cent to ₹658.40 compared with the previous close of ₹644.50. However, gains tapered off later in the session, with the stock trading largely flat at ₹648.90 around 10.30 am.

Global brokerage Jefferies sees nearly 40 per cent uptick from the previous close.

KEY HIGHLIGHTS

HDB Financial Services shares rose 2 per cent but remain below listing levels.

Stock debuted on July 2, 2025, at a 13 per cent premium on the National Stock Exchange and BSE.

Jefferies retained buy with ₹900 target price.

Growth and asset quality improvements seen as key re-rating triggers.

The non-banking financial company, a subsidiary of HDFC Bank The stock listed at ₹835, marking a premium of 13 per cent over its IPO price of ₹740 on the National Stock Exchange and BSE. Despite the solid listing, the share price has since retreated significantly amid broader market volatility and profit-booking.

It had hit a 52-week low of ₹633 on March 16, 2026, nealy 24 per cent below the listing price.

Jefferies maintains buy at ₹900

Jefferies remains optimistic about the stock’s prospects and believes the recent correction offers an attractive entry opportunity for investors. The brokerage has maintained a buy rating on the stock while trimming its target price to ₹900 from ₹920, implying meaningful upside from current levels.

According to Jefferies, management interactions indicate that demand trends remain healthy in the ongoing quarter. The brokerage expects assets under management growth to improve to 16–18 per cent by FY27. Net interest margins are projected to remain steady despite a marginal increase in the cost of funds.

Jefferies also highlighted improving asset quality metrics. Collection efficiency has strengthened, and credit costs are expected to decline to around 2.4 per cent in the near term, with further easing likely over the medium term. Management has guided for return on assets to improve to 2.5 per cent by FY28, supported by stronger earnings momentum between FY26 and FY28.

The brokerage added that valuations appear reasonable following the recent pullback in the stock price. It believes a sustained improvement in growth momentum along with a decline in credit costs could act as key catalysts for a re-rating of the stock.