Check Before You Invest : HDB Financial Services Ltd

BSE: 544429 NSE: HDBFS ISIN: INE756I01012

| Sector: BFSI | Industry: Finance - NBFC

Snapshot

Q.1 Which industry/sub-sector does HDB Financial Services Ltd belong to?

HDB Financial Services Ltd belongs to the BFSI sector, operating specifically within the Finance - NBFC segment.

Q.2 Is HDB Financial Services Ltd a good quality company?

HDB Financial Services Ltd is a good quality company, based on a consistently good 10-year financial track record.

Q.3 Is HDB Financial Services Ltd undervalued or overvalued?

HDB Financial Services Ltd appears Somewhat overvalued, as its key valuation ratios are above with their past averages.

Q.4 Is HDB Financial Services Ltd a good buy now?

HDB Financial Services Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

Q.1 Total Income growth of HDB Financial Services Ltd?

HDB Financial Services Ltd Operating Income growth is 15.01% for FY-2025, which is above its 5-year CAGR of 8.67%, indicating faster growth.

Q.2 Return on Assets of HDB Financial Services Ltd?

HDB Financial Services Ltd Return on Asset is 2.2%, which is in line with its 5-year historical median of 2.2%, indicating stable earnings on assets.

	Current Level	5-year Historic Median
NPM%	13.35	13.35
PPOP%	15.53	10.68
RoA%	2.2	2.2

Q.3 Return on Equity (ROE) of HDB Financial Services Ltd?

HDB Financial Services Ltd Return on Equity is 14.8% for FY-2025, which is in line with its 5-year historical median of 14.8%, indicating the business is making similar use of its shareholders capital.

Q.4 Pre-provisioning operating profit margin of HDB Financial Services Ltd?

HDB Financial Services Ltd Pre-provisioning operating profit margin, which is the bank’s core operating profit before provisioning for bad loans, is 15.53% for FY-2025, which is above its 5-year median(10.68%), indicating increasing margins.

Q.5 Net Profit Margin of HDB Financial Services Ltd?

HDB Financial Services Ltd Net Profit Margin, which is the difference between the rate of interest earned on assets and the rate of interest paid on liabilities, is 13.35% for FY-2025, which is in line with its 5-year median( 13.35%), indicating stable margins.

Q.6 Total Asset growth of HDB Financial Services Ltd?

HDB Financial Services Ltd Total Asset growth is 17.34% for FY-2025, which is above its 5-year CAGR of 12.32%, indicating faster growth.

Q.7 Capital Adequacy ratio of HDB Financial Services Ltd?

HDB Financial Services Ltd Capital Adequacy ratio (CAR) is 19.2% for FY-2025, which is above the regulatory requirement of 15%, indicating strong capital position.

Ownership & governance

Q.1 Promoter shareholding and pledge status of HDB Financial Services Ltd?

Promoters hold 74.12% of the HDB Financial Services Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

Q.1 AUM Growth of HDB Financial Services Ltd vs Industry Peers?

HDB Financial Services Ltd AUM CAGR is 12.32%, compared to the 5-year industry median CAGR of 15.99%, indicating slower growth and losing its market share.

Q.2 Profit metrics (NPM, PPOP, RoA) of HDB Financial Services Ltd vs industry peers

HDB Financial Services Ltd profit metrics are in line with the industry median level of 9.53%, indicating similar profitability compared to peers.

Profit Metrics

	Current Level	5-year Industry Median
NPM%	13.35	13.77
PPOP%	15.53	12.76
RoA%	2.2	2.05

Q.3 Operating efficiency of HDB Financial Services Ltd vs industry peers?

HDB Financial Services Ltd ROCE (9.8) is above the industry median of (9.05); while the current ROE (14.8) are above than the 5-year average Industry ROE (12.85). This shows that the business is positioned in the top quartile of the industry.

Operating Efficiency

	Current Level	5-year Industry Median
NPM%	13.35	13.77
PPOP%	15.53	12.76
RoA%	2.2	2.05
ROCE%	9.8	9.05
ROE%	14.8	12.85

Valuation & price assessment

Q.1 Stock return of HDB Financial Services Ltd over the last decade?

Over the last - years, the stock has delivered a CAGR of N/A% based on the current price.

Q.2 What return has the stock given over the last decade?

	9Y	5Y	3Y	1Y
Share Price CAGR	-	-	-	-

Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?

Valuation Ratios	Current	5-year Historic Median	5-year Industry Median
Price to Earnings	21.42	28.13	28.96
Price to Book	2.64	2.91	1.11
Price to Sales	3.44	3.75	9.10
EV to EBITDA	10.82	11.33	11.77

Q.4 Valuation ratios of HDB Financial Services Ltdvs historical and industry averages?

The current Price to book ratio (P/B) 2.64% is lower than its historical median of 2.91%, indicating that at the current price the stock is undervalued. However, you need a deeper analysis to make a better judgement.

Strategic outlook

Q.1 Does its ROIC exceed its WACC?

HDB Financial Services Ltd return on invested capital (ROIC) is 6.98% for FY-2025, is lower than its estimated weighted average cost of capital (WACC) of 14%, indicating value erosion.

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