HDB Financial Services Limited

Financial Services — Credit Services · NSE

₹514.00−₹25.10 (−4.66%)

DalalBaazaar Score

73 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Moderate

Driven by negative free cash flow.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:45 pm

Understanding the Business

Company site ↗

The 60-second version of HDB Financial Services Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

HDB Financial Services Limited operates as a non-banking financial company that provides lending and business process outsourcing services in India.

IndustryCredit Services

SectorFinancial Services

Employees88,162

Annual revenue₹18,143 Cr

How does it make money?

Turns over ₹18,143 Cr a year. Of every ₹100 of sales, about ₹14 reaches shareholders as profit, with ₹54 left at the operating level before interest, tax and depreciation. Each of its 88,162 employees supports ₹20.6 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹20.6 lakh

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, STATE BANK OF INDIA, HDFC BANK LTD, ICICI BANK LTD.. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

Peer median ROE16.5%

What is the outlook?

16 analysts covering the stock expect revenue to grow about 13.6% and earnings to grow about 16.8% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+13.6%

Est. earnings growth+16.8%

Analysts16

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +48% while net margin moved -12% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+48%

Margin effect-12%

DalalBaazaar Score

73/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Profits have been consistent from year to year
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

73/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

68/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

14.5x

1.4Y Median

26.1x

17 monthly readings · mean 25.0x · range 16.6x–29.6x

Sector Median

17.0x

median of 4 sector peers

🟢Current valuation is approximately 45% below its 1.4y median of 26.1x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟡Against its sector it is priced broadly in line with the peer median of 17.0x.

vs. its own history

Cheap

26.1x median over 17 months · -45%

vs. sector peers

Fair

17.0x median of 4 peers · -15%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

14.3x

PEG

1.59

What's Good / What's Bad

🟢 What's Going Well2

Margins are improving
EBITDA margin is up from 49.2% to 54.2% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Return on equity is falling
ROE has dropped from 17.1% to 12.3% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 9.9% to 7.9% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 350% against revenue growth of 48% — customers are taking longer to pay.

Red Flags

1 item require attention · 1 high

🔴Thin interest coverageFinancial
Operating profit covers interest only 2.0x — little room if earnings dip.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 49.2% to 54.2%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 45% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Returns on shareholder capital are falling
ROE has dropped from 17.1% to 12.3%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 11% a year✓ 14.0% CAGR
Latest reported year was 16.9%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 52%✓ 54.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Return on equity stays above 12%✓ 14.3%
For a lender this is the cleanest single read on whether the book is being grown profitably.
4Interest cover stays above 3x✗ 2.0x
How much operating profit can fall before interest stops being comfortably covered.
5Valuation vs its own median of 26.1x✓ 14.5x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

7 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 4 neutral · 3 weak

Market Cap

₹42,583 Cr

Mid Cap

Mid-sized — more growth headroom, but sharper swings than large caps

P/E (Trailing)

14.5x

Cheap

Cheap against the generic band

P/B Ratio

1.93x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹35.57

Profitable

Profitable on a per-share basis

ROE

14.3%

Moderate

Moderate capital efficiency

ROCE

7.9%

Weak

Low return on total capital employed

Debt/Equity

4.71x

High

High leverage

Revenue Growth (YoY)

16.9%

Healthy

Healthy top-line growth

Profit Growth (YoY)

34.2%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.78%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹8,749 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

11.3x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

ROA

2.4%

Weak

Assets generate little profit

Operating Margin

42.5%

Good

Healthy core-business profitability

Net Margin

30.8%

Good

Strong bottom-line conversion

Current Ratio

301.37

Comfortable

Healthy short-term liquidity

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

619.1 / 657.1

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

16.7

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹12,244 Cr	₹13,946 Cr	₹16,080 Cr	₹18,143 Cr	+14.0%
EBITDA	₹6,028 Cr	₹7,233 Cr	₹8,729 Cr	₹9,825 Cr	+17.7%
EBITDA Margin	49.2%	51.9%	54.3%	54.2%	—
PAT (Net Profit)	₹1,959 Cr	₹2,461 Cr	₹2,176 Cr	₹2,544 Cr	+9.1%
EPS	₹23.62	₹29.66	₹26.29	₹30.88	+9.3%
ROE	17.1%	17.9%	13.8%	12.3%	—
ROCE	9.9%	9.7%	9.6%	7.9%	—
Total Debt	₹54,865 Cr	₹74,331 Cr	₹89,682 Cr	₹99,230 Cr	+21.8%
Free Cash Flow	-₹6,962 Cr	-₹16,859 Cr	-₹13,836 Cr	-₹8,749 Cr	—

🟢 Revenue has grown at 14.0% a year over 3 years.

🟢 EBITDA has grown at 17.7% a year over 3 years.

🟢 EBITDA Margin has risen from 49.2% to 54.2% over 3 years (+4.9 pts).

🟢 PAT (Net Profit) has grown at 9.1% a year over 3 years.

🟢 EPS has grown at 9.3% a year over 3 years.

🔴 ROE has fallen from 17.1% to 12.3% over 3 years (-4.8 pts).

🔴 ROCE has fallen from 9.9% to 7.9% over 3 years (-2.0 pts).

🔴 Total Debt has grown at 21.8% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1.24 L Cr

Total Liabilities

₹1.03 L Cr

Cash & Equivalents

₹1,246 Cr

Operating Cash Flow

-₹8,606 Cr

Capex

-₹144 Cr

Shareholding (proxy)

Institutional Holding

11.9%

Insider Holding

74.4%

Corporate Actions

Dividend Rate

₹4

Ex-Dividend Date

23 Oct 2026

Analyst Consensus

Recommendations

9 Buy · 5 Hold · 2 Sell

Target Price (Mean)

₹737.88

+43.6% vs CMP

Target Range

₹610 – ₹900

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
STATE BANK OF INDIA	10.3x	15.2%
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%

Recent News

4 mixed2 general

HDB FINANCIAL SERVICES L Share Price - Live NSE: HDBFS Stock Price & Chart

Upstox, 17 Oct

HDB Financial Services (NSEI:HDBFS) - Stock Analysis

Simply Wall Street, 14 Oct

HDB Financial Services shares fall further below issue price after 7% plunge on Q2 results

CNBC TV18, 15 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

HDB Financial shares fall 4% after Q2 results as brokerages cut targets

Business Standard, 15 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

HDB Financial shares plunge nearly 17% in three days; what should investors do?

Business Today, 16 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

HDB Financial Services Share Price Fall, Ratios and Peers

Univest, 14 OctPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Watch Items

Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Valuation

MiddlingProfitability · Risk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 1 high-severity red flag sits above this conclusion and should be read first.

1 of 5 tripwires tripped — Interest cover stays above 3x · see Key things to watch ↑