HDB Financial Services shares were in focus after global brokerages Jefferies and Morgan Stanley issued contrasting views following the company’s September quarter (Q2FY26) earnings. While Jefferies maintained a Buy rating with a target price of ₹900, implying a 21% upside from the current market price of ₹742.40, Morgan Stanley reiterated its Equal-weight stance with a target price of ₹805, indicating limited near-term upside potential.
Morgan Stanley on HDB Financial:
Morgan Stanley said HDB Financial’s Q2FY26 profit after tax (PAT) beat its estimates due to a 6% operating profit beat, driven by higher net interest income (NII) and lower operating costs. However, it cautioned that credit costs, bad loan formation, and write-offs remained elevated, though Stage 2 assets were stable sequentially.
The brokerage raised its FY26 EPS estimate by 4% on higher margins but trimmed FY27/FY28 estimates by 0.4% and 3%, respectively, to factor in normalization of spreads and provisioning trends. Morgan Stanley maintained its Equal-weight rating with a target price of ₹805, reflecting a balanced risk-reward outlook.
Jefferies on HDB Financial:
Jefferies maintained a Buy rating with a target price of ₹900, noting that Q2FY26 PAT stood at ₹5.8 billion, down 2% year-on-year and 2% below its estimate. The miss in lending PAT (5% below estimates) was largely due to higher provisions, though it was partly offset by stronger performance in the BPO segment.
Jefferies added that AUM growth moderated to 13% YoY, but NIM expanded 20 basis points sequentially, surprising positively. Asset quality slipped slightly quarter-on-quarter, primarily due to stress in the commercial vehicle (CV) portfolio. The brokerage noted that early trends in consumer and auto segments for October have been positive, and expects growth and asset quality to improve in the second half (H2FY26), aided by the GST cut and normalization in business activity.
While both brokerages acknowledged margin improvement and stable Stage 2 assets, Jefferies remains more constructive on growth recovery, whereas Morgan Stanley prefers to stay cautious given elevated credit costs.
Disclaimer: This article is for informational purposes only and not a recommendation to buy or sell any securities. Brokerage views are based on their respective research reports and publicly available information.