ICICI Securities has maintained its 'Buy' rating on HDB Financial Services with a target price of Rs 900. The brokerage highlighted improved sanction rates for unsecured loans and strong performance in the commercial vehicle segment. The stock currently trades around Rs 687.50, and investors are watching the firm’s credit quality trends following its mid-2025 market debut.
ICICI Securities has reiterated its positive outlook on HDB Financial Services, keeping a target price of Rs 900 for the retail-focused non-banking financial company (NBFC). The brokerage's assessment comes as the lender, which is a key subsidiary of HDFC Bank, continues to expand its footprint after its public listing in June 2025. With a network of over 1,700 branches, the firm remains a significant player in the semi-urban and rural credit markets.
The brokerage points to operational improvements as a primary driver for its view. Recent data indicates that the company has successfully increased its sanction rates for unsecured business and personal loans. Specifically, rejection rates for these loans have declined, dropping from 70% in early 2026 to 55%. Analysts suggest this indicates better underwriting and a reduction in over-borrowing among the company's customer base, which is a positive sign for long-term credit stability.
Strategic Market Focus
Beyond personal credit, the company is doubling down on the commercial vehicle segment. HDB Financial Services holds a strong position in the intermediate heavy commercial vehicle market, particularly in Uttar Pradesh, a region that contributes roughly 14% to its total assets under management. The firm is now shifting its strategy to focus more on the used commercial vehicle market, an area where it expects to capture wider profit margins due to lower competition and under-penetration.
While the outlook is positive, investors must be aware of the inherent risks in the lending business. HDB Financial Services is classified as an 'Upper Layer' NBFC by the Reserve Bank of India, which subjects the company to stricter regulatory oversight and capital requirements compared to smaller peers. This regulatory framework is designed to ensure stability, but it also means the company must maintain a robust capital buffer.
Risks and Future Monitorables
Like many lenders, the company faces exposure to sector-wide risks, including fluctuating interest rates and the potential for volatility in credit quality. While the company has seen improvements in unsecured loan sanction rates, maintaining low credit costs remains a challenge. Investors should keep a close watch on the company’s asset quality metrics, specifically whether it can sustain these improved sanction trends without increasing bad loans in the future. Additionally, as the stock is still relatively new to the public market, investors may track how the share price behaves against the broader volatility often seen in the financial services sector.